Exclusive: Drugmakers offer Canada C$1 billion to scrap some pending pricing rules

Canada's Minister of Health Patty Hajdu speaks in parliament during Question Period in Ottawa

Allison Martell
Sun, 15 November 2020

TORONTO (Reuters) - The pharmaceutical industry has made a last-ditch C$1 billion ($761 million) proposal to the Canadian government in hopes of fending off parts of a drug pricing crackdown set to go into effect on Jan. 1, according to industry documents reviewed by Reuters.

The remaining regulations would still reduce drugmakers' revenue by at least C$19.8 billion ($15.1 billion) over 10 years, according to an industry estimate.

If other costly reforms are shelved, the industry is willing to spend C$1 billion over the same period to boost local manufacturing and commercialization, and on new programs to improve access to drugs for rare diseases.

The government has argued that Canada's patented drug prices are too high, trailing only the United States and Switzerland, and that other countries with lower prices enjoy similar access to prescription medicines.

Innovative Medicines Canada (IMC), the industry's lobby group in Canada, met with Minister of Health Patty Hajdu on Oct. 16, and submitted a written proposal the following week, but has not yet heard back, IMC President Pamela Fralick said.

"We have come forward with some considerable options for government to consider, and there just does not seem to be that interest," Fralick said in an interview. "We felt it was time to let Canadians know what the government is, in fact, passing up."

In a statement, the health minister's office said the government will always consider proposals "about different ways to achieve the Government's objectives," but also noted that "no amendments to the regulations are currently in development."

"The position of the Government of Canada remains unchanged — Canada has among the highest patented medicine prices in the world, and these high prices negatively affect the ability of patients to access new medicines," said the statement.

Reuters reported in February 2019 that the industry had offered to give up C$8.6 billion in revenue over 10 years to head off the pricing reform plan.

The industry has since backed down on one part of the plan, which will change the comparison countries Canada's Patented Medicine Prices Review Board (PMPRB) uses as a benchmark to set some maximum prices. The PMPRB will drop the United States and Switzerland from its comparisons, and add nations with lower prices.

But the regulations also empower the PMPRB to consider the cost-effectiveness of new drugs, and their potential impact on government budgets, an approach the industry has fought for years.

Drugmakers and some patient groups argue that price reductions, and the uncertainty associated with the complex cost-benefit analysis that will be required for some new medicines, will make pharmaceutical companies less likely to launch new drugs in Canada's relatively small market.

While Canadian sales are not material to most global drugmakers, the new regulations could inspire similar reforms in other countries, or more directly affect foreign prices. Many countries set drug prices based in part on those in other countries, so price cuts could ripple across the globe.

The United States, the world's biggest prescription drug market, is a notable exception, with unregulated drug pricing.

That could change. The Trump administration had floated a plan that would take prices in other countries into consideration, although nothing has come of it. U.S. President-elect Joe Biden's platform similarly promised a new review board that would base payments by the government's Medicare health plan partly on prices in other countries.

IMC did not offer much detail on how a rare disease program could work, but said it could improve "access and sustainability." Drugs for rare diseases are particularly costly.

In some other countries, like Scotland, specially negotiated programs bring expensive rare disease drugs to market at a discount or with spending capped, giving drugmakers more time to prove their worth.

(Reporting by Allison Martell in Toronto; Editing by Denny Thomas and Bill Berkrot)