Canadians have access to fewer new drugs than Americans and Europeans, and consequently may endure undue suffering from ailments and disease. And we wait much longer for drugs that are approved here. For once, this unfortunate situation has little to do with bureaucratic lethargy but rather hostility governments and public agencies have shown towards the biopharmaceutical industry.
Indeed, to obtain approval from Health Canada to market a new medicine, drug companies enter a similar process to that in the United States and the European Union. But for 215 drugs eventually approved in both countries between 2012/13 and 2018/19, it took 464 days (on average) longer in Canada compared to the U.S. And 395 days longer (on average, for 191 drugs) than the E.U.
Why? For starters, Canada’s market is relatively isolated and covers a huge area with low population density. Widely-dispersed health professionals and care facilities pose unique marketing, delivery and distribution challenges in expense and time. But crucially, federal, provincial and territorial governments exacerbate this natural disadvantage by erecting impediments that make Canada’s pharmaceutical environment less attractive. These impediments include the lack of a dedicated “orphan” drug policy to incentivize manufacturers to develop drugs for rare disorders, few incentives to accelerate innovative medicines through the regulatory process, weaker intellectual property protection, and significant price evaluation hurdles.
Meanwhile, drug companies prioritize drug submissions to countries with favourable environments, which include incentives that shorten regulatory review times, strong intellectual property rights, policies and criteria put in place by public insurance providers for coverage that don’t inhibit patient access to new medicines, and less burdensome cost-effectiveness assessment, price negotiation and price regulation processes. Canada does poorly in all these areas.
Added to existing disincentives to submitting drugs, the federal government made matters worse in 2017 with proposed revisions to the Patented Medicine Prices Review Board, the government’s quasi-judicial tribunal tasked to prevent time-limited drug patents from being abused. The proposals caused an extraordinary degree of uncertainty among manufacturers, which resulted in even fewer new medicines submitted for approval in Canada. Between 2006 and 2014, 80 per cent of new drugs submitted for regulatory approval in the U.S. and E.U. were also submitted for approval in Canada. By 2020, that number dropped to 44 per cent.
Although legal challenges led to court rulings against almost all the proposed changes, the federal government still wants to reduce drug prices in Canada. Consequently, it’s highly likely that manufacturers will continue to wait and see before launching here.
Again, the result will be continuing—perhaps even increasing—delays in medicines being submitted for marketing approval in Canada. When policymakers see new medicines in terms of high prices and not the benefits they can bring to patients, our access to innovative medicines is at risk.
Everyone would like new drugs to be cheaper, but not at the expense of having pharmaceutical companies and their innovative medicines bypass Canada entirely. Several adversarial barriers to launching novel medicines already exist in this country. Canadians don’t need further deterrents from their governments. Without a collaborative relationship between manufacturers and government, Canadians with unmet health-care needs will continue to suffer.
Nigel Rawson is a senior fellow and Bacchus Barua is an economist at the Fraser Institute.