The federal government established the Patented Medicine Prices Review Board (PMPRB) in 1987 with a mandate to protect Canadian consumers from excessive prices for patented medicines. Many stakeholders consider these 1987 regulations outdated. As well, the list prices of patented medicines in Canada are higher than in most of the 38 member countries of the Organisation for Economic Co-operation and Development (OECD). In 2017, the PMPRB began two years of consultations to reform its price review process. In August 2019, the federal government published PMPRB’s new regulations, which are expected to save billions of dollars.
Implementation was originally scheduled for July 1, 2020—and has been delayed four times, primarily due to the COVID-19 pandemic. The regulations are currently slated to come into force on July 1, 2022. The final guidelines for pharmaceutical manufacturers were released in October 2020.
From the perspective of the health insurance industry and its customers, these reforms are long overdue. The Canadian Life and Health Insurance Association (CLHIA) states that they “strike the right balance between reducing the high cost of prescription drugs in Canada, while also continuing to ensure Canadians have access to affordable and necessary medications.” Several provincial payers, large unions (including the Canadian Federation of Nurses and CUPE) and patient groups also publicly support the coming changes.
Opposition is strong from pharmaceutical manufacturers and includes two legal challenges that remain before the courts. Some patient groups (such as Cystic Fibrosis Canada) are also lobbying against the changes due to concerns about their impact on access to new medications.
When PMPRB’s new pricing framework comes into effect, the regulation of pricing will change in two main ways:
- The “basket” of countries used for comparison pricing has been realigned to be a better fit with the Canadian context and economy.
Original “PMPRB7” basket (since 1987)
|New “PMPRB11” basket (to take effect July 1, 2022)|
PMPRB is removing the U.S. because drug pricing there is mostly unregulated, with prices as much as three times higher than other countries. Switzerland is removed because their gross domestic product per capita is almost double that of Canada; like the U.S., drug prices in Switzerland are among the highest in the world.
2. New measures for high-cost drugs.
- A cost-effectiveness assessment to encourage pricing that reflects how well a new treatment works; and
- A market size adjustment: when a patient population grows, the price may need to be adjusted to reflect the market for the drug.
The multiple, extensive rounds of consultation during the past two years reflect a complex puzzle that involves Health Canada, the pan-Canadian Pharmaceutical Alliance (pCPA), the Canadian Agency for Drugs and Technology in Health (CADTH), the Canadian Drug Agency (CDA), public plans, private plans, provincial cancer care agencies, pharmaceutical manufacturers, patient groups and more. While these reforms won’t solve all the challenges surrounding drug pricing in Canada, they’re an important start.
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This article is part of Benefits Alliance’s Take 5 for Health Benefits Initiative. Take 5 provides a deeper look at employee health benefits, drawing from the experiences of plan sponsors, subject matter experts and the latest research. The Take 5 newsletter is delivered quarterly to plan sponsors across Canada.