OTTAWA—A federal government move to lower drug prices is winning praise from some patient advocates but sparking concerns that it will dampen research into pioneering new medicines and exacerbate a potential drug shortage at a time when American states are looking to Canada for their drug supplies.
Health Canada on Friday unveiled changes to give an independent watchdog better tools in its job to keep vigil over the price of patented medicines in Canada.
It is billed as the most substantive changes in three decades, and the government says it will mean savings of more than $13 billion over the next decade. And the changes are seen as a critical step toward a pharmacare program for Canada.
“We are very pleased that these amendments are going to be adopted,” said Melanie Benard, national director of policy and advocacy for the Canadian Health Coalition, a group of health-care workers, unions and community organizations.
“We do think this is a really important step toward building a national pharmacare program because it’s going to make patented medicine prices much more affordable for the public drug plan,” she said in an interview.
But others sounded a warning note on the changes, saying that dampening drug prices will reduce the economic incentive for global pharmaceutical firms to be in Canada.
“We are very concerned that this will cause access problems for Canadians to get the drugs they need when they need them,” said Pamela Fralick, president of Innovative Medicines Canada, which represents 41 pharmaceutical companies.
She said the changes, which will take effect next July, will undermine the business case for pharmaceutical firms.
“As the various companies realize that the environment is not particularly conducive to being here, we are very concerned that they will no longer be funding clinical trials,” she said.
That view was echoed by the Canadian Organization for Rare Disorders, which said the move will require companies to introduce new drugs at prices so low they won’t bring them to Canada. That means that Canadian patients won’t have access to clinical trials or new medicines until they’ve been approved in other jurisdictions, the organization said in a statement.
“Either the federal government can’t understand the disastrous impact on patients with high needs or they simply don’t care.” said Durhane Wong-Rieger, its president and CEO.
The U.S. Chamber of Commerce also weighed in, saying that drug prices must “accurately reflect” the research and testing that often stretches over decades to bring a new medicine to market. It said that the Health Canada changes would “artificially” set lower drug prices with consequences for Canadians.
“The result of Health Canada’s decision will inevitably be reduced and delayed access for Canadian patients to the latest innovative medicines,” it said in a statement.
As revealed by the Star Friday, the changes affect the role of the Patented Medicine Prices Review Board, an independent quasi-judicial board that monitors the prices of patented medicines and has the power to intervene when it deems a cost is excessive.
For example, one change will remake the basket of countries that the review board uses as benchmarks when weighing drug prices. Another change will allow the review board to consider the market price of drugs, including information about third-party rebates, rather than the price published by the pharmaceutical companies.
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“The amendments are part of the government’s overall strategy to ensure that Canadians can afford the medications they need,” said Lawrence Cheung, director of the office of pharmaceuticals management strategies at Health Canada.
The changes will take effect July 1, 2020, and some will only apply to new drugs. While the government is touting the savings, for consumers, it wasn’t clear whether it will mean actual price cuts or simply moderate future price increases.
Cheung said that savings will start slowly and ramp up over time. “They will see some savings initially, but it will increase as the time goes further on,” he said.
Despite government complaints that drug prices in Canada rank among the highest in the industrialized world, the review board intervenes in drug prices only once or twice a year, sometimes less. But Doug Clark, the board’s executive director, expects that to change once the changes take effect.
“I suspect with these new powers, these new tools and new information, that we will be able to avail ourselves of, we anticipate considerable uptick in litigation as the industry’s patentees test the boundaries of the new regime,” Clark said.
Cheung acknowledged that the government has heard industry concerns about the potential impact on revenues and investments but downplayed the potential fallout.
“In our forecasts, the revenues for industries will increase over the 10-year period despite the significant savings that Canadians will experience,” he said.
“There is no indication that higher prices charged in a country leads to higher economic investment or jobs,” he said.
The changes come at a time when several American states are considering plans for bulk imports of lower-cost prescription drugs from Canada, raising fears such a move could cause a shortfall north of the border.
That’s a complicating factor at a time when the government changes already stir uncertainty about the supply to Canada’s drug market, said John Adams, chair of the Best Medicines Coalition.
“What is this actually going to do for patient access to medicine … Is Canada going to become less attractive to companies?” Adams told the Star.
“Is the threat of American bulk imports going to make things worse for Canadians who need their prescription drugs?” he said.
Cheung said that the government’s “first and foremost” priority is “ensuring that Canadians have access to the prescription medicines they need.”
Bruce Campion-Smith is an Ottawa-based reporter covering national politics. Follow him on Twitter: @yowflier