On July 1, 2021, new regulations for the Patented Medicine Prices Review Board (PMPRB), a little-known federal tribunal that ensures prices of patented medicines in Canada are not excessive, will be implemented, unless delayed or halted by court challenges or the federal Cabinet.
The regulatory amendments will allow the PMPRB to remove the United States and Switzerland (both high drug price nations) from the group of countries used in its international price comparison test and replace them with six other countries with lower drug prices. In addition, the international price comparison will be adjusted from the top of the class to the median price, which will result in additional price reductions.
According to the PMPRB, this is projected to lead to price reductions for existing medicines of 34 percent and an overall aggregate decrease of five percent. However, case studies and other analyses, which took account of additional economic tests that will be applied to some medicines, have pointed to much larger reductions that will be unsustainable for manufacturers.
The PMPRB has been asked by the federal Cabinet to self-evaluate the outcomes of its new regulations and has produced a “monitoring and evaluation plan” for stakeholder consultation. In its consultation document, the PMPRB continues to perpetuate the myth that prescription drugs are the second largest component of health care expenditure ahead of physician costs.
In reality, prescribed medicines make up 13 percent of health care expenditure, behind hospitals and physicians at 26 percent and 15 percent, respectively. The prescribed medicines percentage includes both generic and patented drugs. The PMPRB’s own annual report shows that the patented prescribed drugs it regulates make up just half of the expenditure. Further, the cost is based on manufacturers’ list prices, not the negotiated rebated ones offered to government drug plans and private insurance companies. Expenditure on innovative brand-name medicines is, therefore, significantly exaggerated.
The PMPRB also falsely claims that there has been no material variation in recent years in the number of clinical trials approved in Canada. This ignores the fact that the number of manufacturer-funded late-phase clinical trials decreased between 2015 and 2020 by 22 percent, compared with only 11 percent in the United States. Late-phase clinical trials are more expensive as they involve many more participants than early-stage trials. They are also the ones in which Canadians with health needs unmet by currently-accessible medicines seek to enrol to get early access to promising therapies.
Independent oversight of the actions of the PMPRB or the impacts of its new rules is not part of the monitoring and evaluation plan. Monitoring and evaluation of the health and economic outcomes of the new PMPRB rules should be performed by an independent external organization to avoid conflicts of interest. Who will regulate this regulator?
Canadians are well aware that the present federal government frequently has trouble identifying conflicts of interest or duty and breaches of ethics. In addition, there are numerous examples in which self-monitoring has led to outcomes that have failed Canadians. One has only to look at issues occurring in the RCMP and Canadian military as current examples of how an internal review process fails key stakeholders.
Disclosure provided by an access to information request shows the PMPRB is using its power and publicly-funded resources to malign key stakeholders – the industry the PMPRB regulates and the patients it claims to protect. The PMPRB communication plan calls for its handful of supporters to say the biopharmaceutical industry is “holding Canadian patients for ransom” and putting “profits first and patients a distant second.” It provides no evidence to support either accusation.
These allegations have further deepened the distrust with which patient advocacy groups view the PMPRB. The clear bias of the PMPRB and its utter disdain for stakeholder input and its regulated sector – the industry that “has been sucking Canada for decades” according to a senior PMPRB director – amplifies the need for an external review to achieve accountability and transparency in public policy development.
Much has been written over the past three years about the risks to Canadians’ access to innovative medicines resulting from the new PMPRB regulations. Nevertheless, the federal government continues to manipulate the biopharmaceutical environment to obtain its ultimate goal, which is to establish an inexpensive national Pharmacare program based on a limited list of “essential medicines.” It wants to do this without having to publicly explain any negative consequences resulting from the changes in the form of delayed access or no access leading to inferior patient health outcomes.
The current federal government will suffer little if drug developers decide not to launch their innovative products in Canada or only to do so much later than in more collaborative countries. In the final chapter, it will be Canadians with unmet health needs whose quality and extent of life will be negatively impacted.
Nigel Rawson is an independent researcher and an affiliate scholar with the Canadian Health Policy Institute. Olaf Koester is managing partner and principal, OHWK Business Management Advisory.