Around the Globe

Lower Drug Prices in Canada?
Pharmaceutical Policy a Major Pillar in Canadian Federal Election
Judith Glennie
JL Glennie Consulting, Inc.
@DrJudithGlennie
C

anadians go to the polls on October 21, 2019 to elect their Federal government representatives. The party that forms the next Federal government will determine whether planned policy initiatives focused on the pharmaceutical system will move forward. While we have covered the early stages of these initiatives in past issues of the Global Forum, the following represents the current state of key policies and their potential impact if the current Liberal government is re-elected.

Patented Medicines Prices Review Board

The Federal Minister of Health and the Patented Medicine Prices Review Board (PMPRB) have been consulting on changes to the Patented Medicines Regulations governing the assessment of patented drug prices since 2017. The Government of Canada has clearly stated that its goal is to lower drug prices for Canadians and it sees these changes as a part of its efforts to lay the groundwork for National Pharmacare (see below).

Draft Regulations were released via the Canada Gazette Part I in late 2017, with subsequent comments making it clear that more time and more substantive consultations with stakeholders would be necessary. A Steering Committee on Guidelines Modernization and a Technical Working Group were established to assess and make recommendations on implementation issues related to the proposed Regulations.

Health Canada announced the final Regulations on August 9, 2019 with no substantive changes from the original draft despite months of efforts and input received from a wide range of stakeholders and experts. A summary of the changes is in Figure 1; the amended Regulations will come into force on July 1, 2020.

Figure 1. Highlights of changes to the Patented Medicine Regulations
ChangeDetails
Change in Reference Countries
  • New comparator countries: Australia, Belgium, France, Germany, Italy, Japan, Netherlands, Norway, Spain, Sweden, and United Kingdom
  • Removal of US and Switzerland from the original basket of countries
Reporting Third Party Price Rebates
  • Prices and revenue information reported by patentees must be net of all price or other adjustments including discounts, rebates, and free goods and services made by the patentee or “any party that directly or indirectly purchases or reimburses for the purchase of the medicines”
  • This includes confidential pricing agreements with provinces, etc.
Additional Economics-Based Price Review Factors
  • Additional price review factors to consider while determining whether the price of a patented medicine in excessive
  • Pharmacoeconomic value of the medicine in Canada
  • Size of the market for sale of medicine in Canada and countries other than Canada
  • GDP and GDP per capita in Canada
Reduced Reporting Requirements
  • For patented generics, veterinary and over-the-counter drugs
  • Reporting only by specific request by the PMPRB
Change
Change in Reference Countries
Details
  • New comparator countries: Australia, Belgium, France, Germany, Italy, Japan, Netherlands, Norway, Spain, Sweden, and United Kingdom
  • Removal of US and Switzerland from the original basket of countries
Change
Reporting Third Party Price Rebates
Details
  • Prices and revenue information reported by patentees must be net of all price or other adjustments including discounts, rebates, and free goods and services made by the patentee or “any party that directly or indirectly purchases or reimburses for the purchase of the medicines”
  • This includes confidential pricing agreements with provinces, etc.
Change
Additional Economics-Based Price Review Factors
Details
  • Additional price review factors to consider while determining whether the price of a patented medicine in excessive
  • Pharmacoeconomic value of the medicine in Canada
  • Size of the market for sale of medicine in Canada and countries other than Canada
  • GDP and GDP per capita in Canada
Change
Reduced Reporting Requirements
Details
  • For patented generics, veterinary and over-the-counter drugs
  • Reporting only by specific request by the PMPRB
Response to the final Regulations has been swift. Patient groups have been particularly vocal in their concerns regarding the amended Patented Medicine Regulations throughout the process. There are very real concerns that the regulatory changes will delay access (with Canada becoming a Tier 2 or 3 launch sequence country) and/or dissuade companies from companies from coming to Canada at all.

A group of pharmaceutical companies has filed a judicial review application, challenging the constitutionality of the changes to the methods by which the PMPRB regulates the costs of patented medicines. The basis of their argument is that “the Federal government does not have the authority to fundamentally alter the role of the PMPRB through the recent changes to the Patented Medicines Regulations.”

National Pharmacare

Subsequent to submitting its interim report in March 2019, the Advisory Council on the Implementation of National Pharmacare released its final report on June 6, 2019. The Council’s mandate had been to provide independent advice to the Federal Ministers of Health and Finance on how to best implement National Pharmacare in a manner that is affordable for Canadians and their families, employers, and governments.

The final report outlined 60 recommendations for implementing a National Pharmacare program, covering the current landscape of drug coverage, the key challenges facing the Canadian drug prescription system, and a proposal for implementing and financing such a program. Figure 2 summarizes some key recommendations.

Figure 2. Highlights of Advisory Council Recommendations for National Pharmacare
ThemeRecommendations
Principles for National Pharmacare
  • Federal government to work with provincial and territorial (P/T) governments to establish a universal, single-payer, public system of prescription drug coverage in Canada
  • The five fundamental principles embodied in the Canada Health Act (i.e., Universal, Comprehensive, Accessible, Portable, and Public) should be applied to National Pharmacare
Implementation of National Pharmacare
  • Begin implementation in 2020
  • Launch National Pharmacare with a list of essential medicines by January 1, 2022
  • Expand the initial essential medicines list toward a fully comprehensive formulary no later than January 1, 2027
Canada Drug Agency (CDA)
  • CDA was introduced as a concept in the March 2019 Federal budget
  • Positioned as a new Federal agency to improve access to and prices of prescription drugs
  • Envisioned to be responsible for evaluating the effectiveness of new prescription drugs; negotiating prices with manufacturers on behalf of public drug plans; recommending which drugs are the best value-for-money for Canadians; providing impartial and independent advice on drug evaluation and price negotiation; and consulting with provinces and territories on developing a national formulary (for the purposes of a National Pharmacare program)
Biosimilars
  • Recommendation to mandate biosimilar substitution for innovator biologics
Expensive Drugs for Rare Disease
  • This strategy was previously announced in the March 2019 Federal Budget
  • The CDA would establish a distinct pathway for the consideration of drugs for rare diseases (DRDs)
  • Within this framework, CDA would work with clinicians and patients to gather structured real world evidence on the impact of DRDs and negotiate performance-based funding agreements with manufacturers
Financing of National Pharmacare
  • The Federal government would provide long-term funding to provinces and territories, including the incremental cost of National Pharmacare, in a manner similar to other health transfer payments
  • NOTE: Inter-governmental financing arrangements require the consent of the Parliament of Canada and at least 70 percent of participating jurisdictions representing two-thirds of their combined population
Role of Private Payers
  • Private insurers would be permitted to provide coverage for copayments as well as for drugs not on the national formulary
Theme
Principles for National Pharmacare
Recommendations
  • Federal government to work with provincial and territorial (P/T) governments to establish a universal, single-payer, public system of prescription drug coverage in Canada
  • The five fundamental principles embodied in the Canada Health Act (i.e., Universal, Comprehensive, Accessible, Portable, and Public) should be applied to National Pharmacare
Theme
Implementation of National Pharmacare
Recommendations
  • Begin implementation in 2020
  • Launch National Pharmacare with a list of essential medicines by January 1, 2022
  • Expand the initial essential medicines list toward a fully comprehensive formulary no later than January 1, 2027
Theme
Canada Drug Agency (CDA)
Recommendations
  • CDA was introduced as a concept in the March 2019 Federal budget
  • Positioned as a new Federal agency to improve access to and prices of prescription drugs
  • Envisioned to be responsible for evaluating the effectiveness of new prescription drugs; negotiating prices with manufacturers on behalf of public drug plans; recommending which drugs are the best value-for-money for Canadians; providing impartial and independent advice on drug evaluation and price negotiation; and consulting with provinces and territories on developing a national formulary (for the purposes of a National Pharmacare program)
Theme
Biosimilars
Recommendations
  • Recommendation to mandate biosimilar substitution for innovator biologics
Theme
Expensive Drugs for Rare Disease
Recommendations
  • This strategy was previously announced in the March 2019 Federal Budget
  • The CDA would establish a distinct pathway for the consideration of drugs for rare diseases (DRDs)
  • Within this framework, CDA would work with clinicians and patients to gather structured real world evidence on the impact of DRDs and negotiate performance-based funding agreements with manufacturers
Theme
Financing of National Pharmacare
Recommendations
  • The Federal government would provide long-term funding to provinces and territories, including the incremental cost of National Pharmacare, in a manner similar to other health transfer payments
  • NOTE: Inter-governmental financing arrangements require the consent of the Parliament of Canada and at least 70 percent of participating jurisdictions representing two-thirds of their combined population
Theme
Role of Private Payers
Recommendations
  • Private insurers would be permitted to provide coverage for copayments as well as for drugs not on the national formulary
It is of note that many of the functions envisioned for the CDA are currently done by organizations that were developed by and have formal reporting relationships to P/T (Provinces/Territories) governments. For instance, the pan-Canadian Pharmaceutical Alliance (pCPA) was established by P/T governments in 2010 to conduct joint negotiations for brand name and generic drugs in Canada to achieve greater value for publicly funded drug programs and patients through using the combined negotiating power of participating jurisdictions. Value for money assessments (i.e., health technology assessments) are currently done by the Canadian Agency for Drugs and Technology in Health (CADTH) and by the Institut National d’Excellence en Santé et en Services Sociaux (INESSS) in the province of Quebec. If the CDA is intended to be national in scope, it is not clear what the implications are for INESSS and its activities.

It is clear that a number of the Council’s recommendations would result in Federal government encroachment on the responsibilities of P/T governments – everything from decisions about automatic substitution of biosimilar products, to pricing negotiations, and health system funding. Thus, a key issue determining the feasibility of moving forward with the Advisory Committee’s proposal is the willingness of P/T governments to relinquish power in some of their core areas of constitutional purview.

As noted above, financing arrangements envisioned for National Pharmacare would require approval by 70 percent of participating provinces and territories, representing two-thirds of their combined populations. Some provinces have already stated their opposition to the plan, although this has not dissuaded the Federal government in their quest.

Implications: PMPRB

  • In addition to the issues raised by patient groups noted above, the impact on clinical trials coming to Canada is another concern. The consequences of such changes on patients with cancer, rare conditions, and other vulnerable populations where important new therapies are being developed — more specifically, launch delays which impact these populations’ access to these therapies — could be catastrophic.
  • It is very difficult to calculate the impact of the regulatory changes in the absence of updated PMPRB Guidelines that define how the new Regulations will be operationalized. The draft Guidelines will be published for comment in September 2019, and will be finalized in advance of the July 1, 2020 implementation in parallel to implementation of the Regulations. The uncertainty this introduces to decisions made on a global basis cannot be underestimated.
  • The absence of “genuine” consultation throughout this process has undermined the credibility of both Health Canada and PMPRB staff with stakeholders. The impact of this on relationships and engagement will be an important determinant of the success of future federal health policy initiatives.

Implications: National Pharmacare

  • It is not clear how the role of private drug plans will play out under a National Pharmacare program. Currently, many patients have private plan access to treatments that are not funded under public drug plans. The risk of private insurers removing drug plans from their benefit offerings could impact timely patient access to new medications.
  • Addressing the complexity of issues related to P/T versus Federal jurisdiction will be critical to the ability to move forward with any National Pharmacare program. These kinds of discussions have never been simple in the Canadian context and are likely to drag on much longer than anticipated by any stakeholder.

Conclusions

This year has seen the introduction of significant uncertainty in the many aspects of the Canadian pharmaceutical policy system. While some initiatives may be seen as positive (e.g., the rare disease framework promised under National Pharmacare), others threaten to undermine not only patient access to medications but also their access to clinical trials based in Canada. It is clear that the outcome of the Canadian election could have a significant impact on this important component of the health care system for years to come.