Will modernizing the Patented Medicines Regulations in Canada lead to savings?

a collection of prescription pills

The Patented Medicines Regulations, those rules that govern the pricing of pharmaceuticals in Canada, are about to change. Many would suggest that it’s about time. There have been no substantive changes in over 20 years and Canada pays some of the highest drug prices when compared to countries of the Organisation for Economic Co-operation and Development (OECD). The United States and Mexico are the only two OECD countries that have higher patented drug prices than Canada.

The government’s proposal, titled Protecting Canadians from Excessive Drug Prices, sets out amendments to the current drug pricing regulations and may bring welcome relief to plan sponsors who continue to endure a climate of soaring drug costs. Read Health Canada’s News Release here.

The main amendments contained in the proposal are:

  1. the use of economics-based price regulation factors (e.g., comparing the value of one pharmaceutical drug or drug therapy to another), intended to price drugs based on “demonstrably better health outcomes” and “Canada’s willingness and ability-to-pay for drugs”;
  2. increasing the number of countries used in the comparison of drug prices (from 7 to 12 countries), while removing the United States and Switzerland from the comparison;
  3. an introduction of a complaints-based system for patented generic drugs; and
  4. corrections to the reporting requirements for patentees (including third-party information related to confidential rebates, refunds, and discounts on domestic prices).

Public Consultation

The online consultation is currently running until June 28, 2017. Interested Canadians and other stakeholders, including the pharmaceutical industry, are invited to read the consultation paper and share their comments. A 16-page abridged version is available for download here.

A summary of comments will be published (date to be determined) in the Regulatory Impact Analysis Statement (RIAS) at Canada Gazette, Part I.

Will the modernization of the pricing framework reduce the price of prescription drugs in Canada?

Time will tell, but we certainly hope plan sponsors will get a much-needed advantage with more affordable drug prices. The debate is complex. Advocates for patients with either very rare diseases or those participating in early phase clinical trials fear that drug companies will lose their incentive to continue developing innovative and novel medicines under a “value for money” model.