Federal government announces changes to lower drug prices

THE federal government on Friday announced the final amendments to the Patented Medicines Regulations. The most significant reforms to the regulations since their introduction in 1987, these amendments will give the Patented Medicine Prices Review Board (PMPRB) the tools to protect Canadians from excessive prices and make patented medicines more affordable.

The federal government noted that millions of Canadians rely on prescription drugs to stay healthy, manage chronic conditions and cure disease—yet they pay some of the highest prices in the world. Last year, more than a million Canadians had to give up essentials like food and heat to afford the medications they need.

Firstly, these amendments will change the “basket” of countries we compare ourselves to when setting drug prices, so that prices here are judged against countries that actually look like Canada in terms of population, economy and approach to health care.

Secondly, these changes will provide the PMPRB with the actual market price of medicines in Canada—rather than inflated list or “sticker” price—to more accurately assess whether a price is reasonable when setting a price ceiling.

Finally, they will let the PMPRB consider whether the price of a drug actually reflects the value it has for patients.

This suite of measures, which the government is implementing to lay the groundwork for National Pharmacare, is the foundation of a system that enables all Canadians to get and afford the medicines they need, the government said.

“Today, we take the biggest step to lower drug prices in a generation. Building on the progress we’ve already made towards lower drug prices, these bold reforms will both make prescription drugs more affordable and accessible for all Canadians—saving them an estimated $13 billion dollars in the next decade—and lay the foundation for National Pharmacare,” said federal Health Minister Ginette Petitpas Taylor.

Established in 1987, the PMPRB is a consumer protection agency and an independent, quasi-judicial body that monitors and regulates drug pricing in Canada. The announcement by the federal government marks the first time regulations have been updated since the board was created.

“These are important changes that impact everyone. We know Canadians spend more on prescription drugs, and that drugs themselves are more expensive here than in other countries,” said Adrian Dix, Minister of Health. “In B.C., we have taken action to lower drug costs by making record investments in Fair PharmaCare, helping to negotiate a new national generics agreement and expanding the use of biosimilar drugs. I am pleased that the federal government is now doing what they can to protect Canadians against excessive drug costs.

“I have advocated for these changes, which are in the best interest of Canadians as they will help each jurisdiction provide a more sustainable drug plan by allowing their limited health-care dollars to be used more efficiently. I look forward to continue working with the federal government to better manage excessive Canadian drug prices within the international landscape.”

Highlights of the amendments include expanding the PMPRB’s list of countries it uses to compare drug prices, using market prices, rather than the list cost set by the manufacturer and allowing the board to consider a drug’s value for patients and health budgets. Canadians are expected to save roughly $13.2 billion over 10 years as a result of these changes.

The PMPRB is an essential component of Canada’s pharmaceutical environment, along with Health Canada, the Canadian Agency for Drugs and Technologies in Health (CADTH) and the pan-Canadian Pharmaceutical Alliance (pCPA). Once Health Canada authorizes a drug for sale in Canada, CADTH then reviews the drug for its therapeutic and cost-effectiveness through its common drug review (CDR) process and makes a recommendation to jurisdictions whether to list the drug on its own formulary. Should the CDR recommendation include a price reduction condition, the drug is then put forward to the pCPA, which can enter into negotiations with the drug manufacturer to lower the price of the drug. Each jurisdiction then takes these recommendations into consideration and reviews the drug through its own independent process.

The PMPRB’s role is to investigate whether drug prices are found to be excessive. The board holds public hearings and has the power to issue remedial orders against pharmaceutical companies following a hearing, including paying back any excessive revenues should a company not voluntarily reduce its price.

The regulatory amendments that were announced reflect B.C.’s and the federal government’s shared commitment of improving the affordability, accessibility and appropriate use of prescription drugs, and are a step toward building a national pharmacare plan.

Quick Facts
* Canadians pay among the highest patented drug prices in the world, after only the United States and Switzerland. Canadians pay close to 25% more than the median price that people in other developed countries pay for the same drugs.
* These amendments are expected to save Canadians approximately $13.2 billion over 10 years on patented drug costs.
* In its final report, the Advisory Council on the Implementation of National Pharmacare made clear that strengthening the Patented Medicines Regulations is absolutely essential to lowering drug prices and moving towards National Pharmacare.
* The amended Patented Medicines Regulations will be published in the Canada Gazette, Part II, on August 21, 2019. In the meantime, Canadians may request a copy from Health Canada at PMR-Consultations-RMB@hc-sc.gc.ca.
* These changes are the product of three years of extensive consultations, study and review, including retaining former Bank of Canada Governor David Dodge to assess the methodology.
* The PMPRB is a federal agency created in 1987 under the Patent Act  to ensure that Canadians are protected and that pharmaceutical companies do not abuse their patent rights by charging excessive prices.
* The Patent Act and the Patented Medicines Regulations  set out the factors and information to be considered by the PMPRB when determining whether the price of a patented medicine is excessive.
* When the PMPRB determines that a patented medicine is priced excessively, it can order the patent holder to reduce the price at which the medicine is sold and to offset the amount of excess revenues it has received.