The Canadian government has announced regulations to reduce patented drug prices it said would save Canadians C$13.2bn (US$10bn) over a decade, overriding heavy opposition from pharmaceutical companies.
The changes are the biggest reform to Canada’s drug price regime since 1987. They will save money for patients, employers and insurers including the government at the expense of drug company profits. They also could eventually cut the earnings of drugmakers in the United States, the world’s largest pharmaceutical market.
The Canadian Life and Health Insurance Association called the regulations “a crucial step to lower prescription drug costs for all Canadians”. The province of British Columbia also applauded the move, saying in a release: “People in BC and across Canada are now better protected against excessive drug prices set by manufacturers.”
The new rules were largely in line with a December 2017 draft. They came after months of delay prompted speculation the government would back down in the face of industry lobbying or simply run out of time before Canada’s October election.
“We are taking the biggest step in a generation to lower the price of drugs in Canada by moving forward with these regulations,” the minister of health, Ginette Petitpas Taylor, said in an interview.
Petitpas Taylor said the new rules would lay the foundation for a new national pharmaceutical care program. Justin Trudeau’s government is expected to announce a program to cover the cost of prescription drugs for some or all Canadians, but the program’s scope is not yet clear.
Under the new rules, Canada will change the list of countries the federal drug price regulator, the Patented Medicine Prices Review Board (PMPRB), compares domestic prices with, dropping the US and Switzerland where prices are highest. It will also let the agency consider the cost-effectiveness of new medicines.
It will also force drugmakers to disclose some confidential discounts to the PMPRB, which sets maximum prices.
Initially expected to go into effect in January, the regulations were delayed so the government could review feedback. They will now go into force on 1 July 2020.
The new features of the regulations, which take into account cost-effectiveness of medicines and their impact on government budgets, apply only to drugs approved by Health Canada after the rules are officially published later this month. Changes in the list of comparison countries could affect prices for some drugs already on the market.
Canada’s approach to drug pricing is unusual. Rather than bargaining prices down, the PMPRB declares that some prices are an illegal abuse of patent rights.
Drugmakers base their list prices on the agency’s published guidelines. When there is disagreement, PMPRB staff can challenge drugmakers at an internal tribunal. Most cases are settled, but appeals go to federal court and beyond.
In the past, drug companies have gone as far as the supreme court of Canada to challenge PMPRB guidelines. With new regulations come new guidelines, and the potential for fresh court challenges.
Global drugmakers, including Johnson & Johnson, Merck and Amgen, argued against the draft plan.
The new policy could eventually have consequences south of the border.
The Trump administration in July said it would allow US states and other groups to start pilot programs related to importing drugs from Canada. It has also said it may start determining what the government healthcare program Medicare pays for certain medicines based on prices in some other countries, including Canada.
