Opinion: Should we trust the feds' plan for pricing drugs?

Canada’s policy on new patented medicines needs to strike a balance between innovation, research, manufacturing and patient access.

Nigel Rawson & John Adams 5 minute read July 28, 2021
drug pricing

When created in 1987, the PMPRB was Canada’s only protection against excessive drug prices. Getty

For several years, the Trudeau government has focused on a policy of “affordability, accessibility and appropriate use of prescription drugs.” This relies on planned changes to price controls on new drugs through the Patented Medicine Prices Review Board (PMPRB), a quasi-judicial tribunal whose regulatory role is to prevent patentees from charging excessive prices.

When created in 1987, the PMPRB was Canada’s only protection against excessive drug prices. But over the past 34 years, its function has become redundant. Although too often the result is highly restricted patient access, health technology assessment agencies and price negotiators for governments and insurance companies have become established in managing drug prices. Canadian insurers, both public and private, can now obtain discounted prices substantially below PMPRB regulated prices.

To retain a semblance of relevancy, PMPRB board members and senior staff developed a regulation framework and lobbied the federal government for its implementation on the pretext of becoming a consumer protection agency. The PMPRB has published several discussion papers attempting to justify its new rules with exaggerated and false claims about a sustainability crisis in health care spending caused by patented medicine prices. These claims have been challenged by manufacturers, patient groups and others with refuting evidence.

Drug prices are not causing a crisis
The PMPRB’s own data show prices of patented medicines are not causing a crisis. Between 1990 and 2019, gross national sales of patented medicines accounted for less than one per cent of Canada’s gross domestic product and never exceeded 8 percent of national health expenditure. In 2019, gross national sales of patented drugs at manufacturers’ list prices were $17.2 billion, just 6.5 per cent of total national health spending of $265.5 billion. In 2000, the figure was 6.4 per cent. An increase of 0.1 per cent over 20 years does not make a crisis. After negotiated rebates (commonly 20 to 30 percent), actual spending is even less.

The PMPRB claims its new regulations will reduce prices only modestly. However, this is contradicted by unchallenged case studies. Allowable prices for new medicines could be reduced by 68 to 84 percent. Research from reputable Canadian, United Kingdom and United States universities shows pharmaceutical companies delay launching new products in small markets — like Canada’s — where regulated prices are low relative to per capita income.

The planned regulation revisions have already diminished Canada’s attractiveness as a market for new medicines. Pharmaceutical companies have moved Canada further down their list of countries where they intend to launch new drugs and, in some cases, even off the list. Early signs of this have been identified in new therapeutic drugs approved in Canada from 2013 to 2019. The PMPRB’s latest consultation, which introduces a completely new price test that would enforce significant reductions in the prices of currently marketed medicines, will have a negative impact on the entire supply chain for both brand-name and generic drugs.

Consequently, it’s not surprising that the biopharmaceutical industrypatient groups, physicians and others have voiced strong opposition to the revised regulations. Concern and hostility have been heightened by disparaging language from the PMPRB about the companies it regulates and “the interests of Canadian consumers” it claims to protect revealed in its communication plan for an advocacy and media campaign to build public support for the changes. Board members and their senior staff have plainly exceeded their role as impartial public servants.

The PMPRB’s objective of ensuring acceptance of its new regulations by Canadians can also be seen in its development of a “monitoring and evaluation plan” with which the Board will self-evaluate outcomes of the revisions. An access to information request shows that, in June, the PMPRB invited 17 “key domestic and international academics to contribute expertise” to a five-hour interactive webinar to refine its monitoring plan. More than half of these academics have publications promoting strong price controls on brand name medicines in Canada and elsewhere, while others were members of a working group advising the PMPRB on the original development of its regulation framework. The invitees were clearly hand-picked to ensure the monitoring plan received endorsement.

In contrast, PMPRB webinars for the biopharmaceutical industry and the public were much shorter and did not allow active interaction. Ignoring the views of the two key stakeholders most impacted by the changes, but paying close attention to those of a panel dominated by academics favourable to strong price controls, shows further evidence of bias. The lack of independent monitoring of the health and economic outcomes of the new regulations by an organization external to government will serve the public and patients poorly.

The PMPRB revisions are supposed to make drugs more affordable in Canada. However, they will not make medicines more accessible because drastically reduced prices lead to delayed or denied access. Canadians need to understand that the PMPRB is not engaged in improving patients’ access to new medicines, nor in fostering much needed stimulation in biopharmaceutical research and manufacturing in Canada.

COVID-19 exposed how badly Canada performs as its own source of development and production of life-saving vaccines and medicines. Except for a handful of incomplete domestic clinical trials, the vaccines Canadians received were all shipped from abroad.

John Adams and Nigel Rawson.

John Adams (left) and Nigel Rawson. Supplied

Access to safe, effective and convenient-to-take medications that improve health outcomes is extremely important to patients. Patients with unmet health needs in Canada are especially concerned about being denied access to new treatments that may be the only options they have to extend their lives or improve their quality of life. Health Canada and the federal Cabinet, which approved the new regulations, are facilitating the PMPRB in overstepping its role.

Canada’s policy towards new patented medicines needs to move from one focused overwhelmingly on prices to one striking a balance between innovation, research, manufacturing and patient access. People living with chronic and rare conditions require access to better treatments, even cures. Patients and their families and friends should think carefully, especially in any upcoming federal election, about what the government needs to do to significantly improve biopharmaceutical development and manufacturing in Canada to ensure earlier patient access to effective medicines.

Lives hang in the balance.

Nigel Rawson is an independent researcher and an affiliate scholar with the Canadian Health Policy Institute. John Adams is cofounder and CEO of Canadian PKU and Allied Disorders Inc. and volunteer board chair of the Best Medicines Coalition.

The views expressed are the authors’ own and do not necessarily represent those of organizations with which they collaborate.