Canadian Government Takes U.S. and Switzerland Off Drug Pricing Comparison List, Pushes for More Transparency

The Canadian government’s Health Canada released final regulations to decrease the price of patented drugs. The agency indicates it would save Canadians C$13.2 billion ($10 billion, US) over a decade. The reforms were met by opposition from the pharmaceutical industry.

“We are taking the biggest step in a generation to lower the price of drugs in Canada by moving forward with these regulations,” stated Minister of Health Ginette Petitpas Taylor.

A significant aspect of the new rules is how the country’s federal drug price regulator, the Patented Medicine Prices Review Board (PMPRB), sets prices by making comparisons to how drugs are priced in other countries. Specifically, they were dropping the United States and Switzerland from their comparator list. The U.S. and Switzerland have the highest prices. The PMPRB will also take into account cost-effectiveness of new drugs.

This is an area where the U.S. is considering changes as well. Earlier this year, the U.S. Department of Health and Human Services (HHS) proposed a new policy called the International Pricing Index (IPI). The IPI would set specific drug prices based on an international benchmark.

Recently, the U.S. Chamber of Commerce Global Innovation Policy Center (GIPC) conducted an investigation into the possible negative impacts of the IPI, and a roundtable presented the results. Previous research into countries that utilize an IPI and that were referenced in HHS’s new proposal, were generally found to have access to fewer new drugs compared to the U.S. The American Cancer Society Cancer Action Network, for example, noted that the IPI “could actually make it harder for cancer patients, especially those living in rural areas, to find the right provider to treat their cancer with the right drug.”

The new Canadian regulations will also force pharmaceutical companies to provide information about some confidential discounts to the PMPRB.

The new regulations were initially planned to go into effect in January but were delayed reviewing feedback. They are now expected to trigger within a year.

Pharmaceutical companies, not surprisingly, were generally opposed to the plan. Johnson & Johnson, Merck & Co. and Amgen all voiced opposition. In a February report, Reuters said that lobbying groups for the pharmaceutical industry had offered to give up C$8.6 billion in revenue over 10 years, freeze prices or decrease the cost of rare disease therapies in order to prevent the Canadian regulation changes.

The lobbying group Innovative Medicines Canada (IMC) argues that lower prices could cause slower drug launches and decrease investment in Canadian life science companies.

Meanwhile, the Trump administration announced it was evaluating proposals to allow consumers to buy drugs legally from Canada. HHS Secretary Alex Azar said that the Trump administration will consider new rules that would allow states, pharmacies and other parties to bring drugs from Canada as part of pilot projects. In addition, the U.S. Food and Drug Administration (FDA) might allow manufacturers to import the U.S. version of their drugs that they sell internationally.

Canada, however, is opposed to this policy. An April briefing for Canadian officials stated, “Canada does not support actions that could adversely affect the supply of prescription drugs in Canada and potentially raise costs of prescription drugs for Canadians.” The briefing was prepared by the Canadian foreign ministry to be used by Canadian officials speaking with U.S. officials.

In a follow-up with Canadian ministry officials at Health Canada, the ministry told Reuters they had “made Canada’s position clear” to federal and state officials in the U.S. and was prepared to “take action to ensure Canadians have uninterrupted access to the prescription drugs they need.”