Canadians currently pay some of the highest drug prices in the world.

We pay close to 25% more than the median price than people in other developed countries for the exact same drugs; only United States and Switzerland pay more. Thus, the Canadian Government decided that something had to be done to contain costs.

In December 2017, the government proposed amendments to regulations governing PMPRB (Patented Medicine Prices Review Board) to protect Canadians from excessive drug prices – and ultimately make patented prescription medicines more affordable.

Changes are expected to come into effect July 1st, 2020

Health Canada said the changes are expected to save Canadians about $13.2 billion over 10 years. The Canadian Life and Health InsuranceAssociation called the regulations “a crucial step to lower prescription drug costs for all Canadians.”

With three major changes to the rules and regulations, not only could these regulations cut the earnings of drugmakers in the United States, the world’s largest pharmaceutical market, it could lay the foundation for National Pharmacare here in Canada.

What are the three major amendments?

  1. The first major amendment targets the comparative countries used to set drug prices. Eliminating the two highest comparative countries with those having much lower drug prices allows prices to be judged against countries that actually look like Canada in terms of population, economy and approach to health care.
  2. The PMPRB will have the actual market price of all medicines in Canada to accurately assess whether a price is reasonable. Private listing agreements and so-called sticker prices will be disclosed.
  3. The last change is that deliver the PMPRB will be allowed to consider whether the price of a drug actually reflects the value it has for patients, relative to its costs.

What problems could arise down the line?

While many speculate that this is the foundation of a system that enables all Canadians to get affordable pricing for medicines they need, some pundits say that these proposed regulations are simply misleading Canadians. The fallout from PMPRB might be as follows;

  • Lawsuits: Whenever new regulations have come into effect in the past, drug companies have challenged to the Supreme Court of Canada claiming unfair targeting bias.
  • Limited access to new medicines: Changes which aim to make prescriptions more affordable could shut off entry of new drugs and could limit Canadian patients’ access to new innovative medicines by delaying, even discouraging the launch of new medicines in Canada. Since launching in Canada will impact the worldwide price of a drug; even though the Canadian market is a tiny market relative to worldwide drug sales.
  • Discouraged investment: Not launching or delayed launching would discourage R&D spending and thus investment in Canada.

Why this could be a win for private plan sponsors

Private plan sponsors can expect to see lower drug prices resulting from the PMPRB’s proposed changes. But there may also be unintended consequences in terms of access. The changes are necessary for bringing clarity to the drug pricing process as well as the transparency it provides towards stability.

What do you think about these amendments? Have your say.