patients and insurers say they want lower drug prices, but what will the cost be?all industrialized nations, except the u.s., control prescription drug prices in some way. in 1987, the canadian government established a unique tribunal, known as the patented medicine prices review board (pmprb), to prevent pharmaceutical companies from charging excessive prices on patented medicines. at that time, this made-in-canada innovation was our only price protector.over the years, bureaucracies have been added to control prices. canada now has three health technology assessment (hta) agencies that play a role in recommending which drugs and vaccines should be covered by government programs, and others have been created to negotiate prices for these programs. private insurers have also built capacity to negotiate prices and set terms and conditions. prices actually paid are now frequently lower than pmprb maximums when discounts and rebates of up to 30 per cent or more are included.
is there a crisis in sustainability? however, despite evidence to the contrary, the pmprb claims that a crisis of sustainability exists in healthcare budgets due to high prices for medicines for diseases like cancer and rare genetic conditions. based on this disputed claim, ottawa intends to drastically reduce new medicine prices by introducing revised pmprb regulations.since 1987, the pmprb has evaluated what is known as the “list price” that a manufacturer proposes to charge for its drug in canada against the asking price in seven countries — france, germany, italy, sweden, switzerland, the united kingdom and the u.s. under the new regulations, the u.s. and switzerland — countries with relatively high drug prices — will be replaced by lower price countries australia, belgium, japan, the netherlands, norway and spain, leading to a lower price ceiling.
in certain circumstances, the pmprb would use a new factor — hta recommendations, even though htas are intended for price negotiation, not regulation — to make an additional assessment of whether the price is excessive, which could lead to a further substantial price reduction. other factors like the medicine’s potential market size and its price in relation to canada’s gross domestic product (gdp) may also be considered and could lead to an even lower regulated price.
so we’re lowering drug prices. isn’t that a good thing? changing the international comparison to include lower price countries may initially seem reasonable. however, canada is not alone in comparing prices. many countries — except the u.s. — do it. when the pmprb first performs its assessment, prices might only be known for some countries, for example france, germany, sweden, the netherlands and the united kingdom, because the drug hasn’t been launched in the others. the canadian ceiling price based on prices in these european countries will be less than with the current assessment because the u.s., where drugs are most often launched first, is excluded.later, the drug is launched in another country – e.g. australia. australia’s regulator performs its own international comparison and includes the canadian price, which results in the maximum price in australia being below what it would have been otherwise. when the drug is launched in yet another country, its comparison may include the lower canadian and australian prices, leading to another lower maximum price. subsequently, more nations will include lower prices from other countries in their comparisons, resulting in much lower prices around the world.this may be beneficial for patients and insurers. but it’s not good for pharmaceutical manufacturers nor for innovation for unmet patient needs. companies are multinational organizations that view the changes in canada as a risk to their success. consequently, they will either delay their launch of new medicines in canada until prices in other countries are finalized so they have a better estimate of potential price reductions here, or decide not to launch them in canada. the latter outcome is more probable if a medicine is likely to be assessed using hta, market size and gdp factors.the pmprb revisions are intended to make drugs more affordable in canada, but this doesn’t mean they will be more accessible — perhaps quite the opposite. new drug launches are already being delayed (e.g. trikafta for cystic fibrosis) and, in some cases, are not occurring (e.g. palynziq for phenylketonuria) because canada’s attractiveness as a market for new medicines has diminished. the pmprb’s mandate doesn’t include improving patients’ access to new medicines or fostering the stimulation in biopharmaceutical research and manufacturing that is much needed in canada.patients would like medicine costs to be reduced, but not at the expense of making access to drugs worse than it is now.
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.
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