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The Canadian government has announced its Budget 2019, that for
the first time in the country's history will take steps to
establish a Canadian Drug Agency that will be responsible for
consolidating all prescription drug regulatory, health technology,
and pricing evaluations and decision-making under one roof. This
means two things for the pharmaceutical industry:
The national drug super-agency will hold significant power to
manage and oversee pharmaceutical access through a national
formulary that will put significant downward pressure on drug
prices.
The government is setting the stage for the establishment on a
national prescription drug reimbursement program (dubbed
Pharmacare) that could transform the operating environment for the
pharmaceutical industry in Canada as we know it.
We still do not know what the proposed Pharmacare program will
look like as we await the final report from the Advisory Council on
the Implementation of National Pharmacare later this year. Some
suggest it will help cover gaps in the existing highly fragmented
market, while others argue that based on the proposed CAD3 billion
in annual savings the government intends to leverage from
establishment of the Canadian Drug Agency over the long-term, the
program is likely to function as a universal publicly-funded drug
plan.
Canada has long entertained the idea of establishing a national
drug reimbursement program to lower prescription drug costs: after
all, is it the only developed market with universal healthcare that
does not provide national prescription drug coverage.
The problem: High drug prices
Currently, Health Canada carries out all marketing approval
evaluations, the main health technology assessment body the
Canadian Agency for Drugs and Technologies in Health (CADTH)
carries out cost-effectiveness assessments, and the semi-judicial
Patented Medicine Prices Review Board (PMPRB) ensures prescription
drug prices are kept below a certain cap. In addition, the more
recently established pan-Canadian Pharmaceutical Alliance (pCPA)
has been carrying out joint negotiations on all products that
complete a CADTH HTA assessment. While these agencies and alliances
provide some equity across Canada with regards to pharmaceutical
drug access, particularly across certain public plans, the
pharmaceutical market remains highly fragmented with multiple
commercial and public plans operating using different designs and
formularies under the discretion of individual jurisdictions.
Consequently, Canadians pay some of the highest prices for
prescription drugs after the United States, with branded products
costing more on average in Canada than other developed markets.
Median OECD drug prices were around 20% less than drug prices in
Canada, according to the latest PMPRB report using 2017 data.
The solution: Pharmacare
Prime Minister Justin Trudeau's government established an
Advisory Council focused on assessing the feasibility of
establishing a publicly-funded national prescription drug plan,
referred to as Pharmacare, in last year's Budget 2018. The Council
released an interim report in March, highlighting three main
pre-requisites to launching a Pharmacare program, including the
establishment on a national drug agency, a national formulary, as
well as increasing investment in data and IT systems to streamline
processes across the healthcare continuum. The Advisory Council on
Pharmacare will be issuing its final report in the next few months,
and this will further outline the exact nature of the proposed
Pharmacare program - whether it will be a universal and exhaustive
or intended to fill in the gaps within the current framework.
The Canadian Drug Agency Transition Office
According to the Budget 2019, the government will be working
with provinces, territories and other partners to outline a vision
and mandate for the super-agency under a newly formed Canadian Drug
Agency Transition Office, with CAD35 million earmarked to Health
Canada over four years starting from 2019 for its development. In
addition, the Budget has proposed to invest CAD1 billion over two
years starting from 2022 with CAD500 million per year after that,
focused on facilitating access to rare diseases by consolidating
decision-making regarding access and pricing when it comes to these
high-cost orphan drugs.
Is Pharmacare imminent?
If Canada does establish a single-payer system, the
pharmaceutical industry will certainly be unfavorably impacted as
mounting pressure from a single negotiating entity will drive down
prices much like other developed markets with pharmaceutical
regulations. The government estimates that the negotiating power of
the Canadian Drug Agency could lower prescription drug costs by up
to CAD3 billion each year over the long-term. What is the
likelihood that Pharmacare will become a reality? Well, the Liberal
government is campaigning for re-election on the promise of
establishing Pharmacare, and the outcome of the federal elections
in October this year will play a big role in determining the fate
of this initiative for the immediate future.
