Nearly 50 life-extending, enriching or saving drugs have cancelled or delayed their Canadian launches in the past year; some of which, were already approved by Health Canada.
“Canadians need to know that in the not-too-distant future, the cutting-edge medications that would help them with their rare disease may simply not be available to them,” says Dr. Michelle Hladunewich, a nephrologist and Physician-in-Chief at Sunnybrook Health Sciences.
She points to U.S. President Trumps’ Most Favoured Nation (MFN) policy and executive order from May of last year , a policy that dictates that Americans pay the best price for prescription drugs.
“The Most Favoured Nation policy identified eight countries, Canada is one of them, that have benefitted from the lowest drug prices in the Western world compared to the United States,” explains Dr. Bettina Hamelin, President and CEO of Innovative Sciences Canada, which represents the pharmaceutical industry. “The United Nations have determined it is not fair. The most favoured nations are not paying their fair share of innovation.”
According to Innovate Sciences Canada, its costs on average $3.5B and ten to fifteen years to bring a new medication to market. Much of those costs are recouped in the U.S. where prices are significantly higher than in other Organization for Economic Co-operation and Development (OECD) countries, and the population is much larger.
“There is an upward pressure on the price here. I think that’s the idea of it. It’s a rebalancing and most favoured nations are not paying their fair share, and you need to pay your fair share. That means prices of drugs need to go up and recognize there is a value to the innovation,” says Hamelin.
In Canada, setting drug prices is a complex and lengthy process. After clinical trials are complete, if Health Canada approves the drug, pharmaceutical companies then submit it to Canada’s Drug Agency who evaluate the cost-effectiveness of the therapy and recommend whether or not it should be covered by public insurance plans.
From there, it goes on to the pan-Canadian Pharmaceutical Alliance (pCPA) who negotiate prices on behalf of Canda and even then, drug companies have to deal with ten separate provinces to get the drug listed on provincial formularies.
Prices negotiated for drugs in Canada and in other OECD countries are significantly lower than in the States.
“A pharmaceutical company ends up with a situation where it either has to force aggressive pricing negotiations in domestic markets or end up having an unfavourable lower price serving as a reference price for its U.S. price, which would not be very good for it,” explains Rambod Behboodi, Senior Counsel with Borden Ladner Gervais LLP (BLG).
“I think when the idea of MFN pricing was first broached, there was a concern in the pharmaceutical industry that it would result in some drugs not even being introduced into Canada and other markets because their pricing would become a benchmark for pricing in the U.S.,” adds Behboodi.
It’s already starting to happen. According to a survey of 31 pharmaceutical and life sciences companies by EY (formerly Ernst & Young), sixteen medicine launches in Canada have been cancelled directly because of MFN pricing, and another 32 drugs have seen their rollouts delayed because of the policy.
Novartis announced its Health Canada approval of Vanrafia – a drug that aims to slow progression of IgA nephropathy (IgAN), or Berger’s disease and ultimately, end stage kidney disease – with a splashy press release last month, then quietly backed away from the approval process.
It did not mention MFN as a driving cause of this decision, but in a statement to CityNews they wrote: “While Novartis remains committed to expanding access to our medicines for patients in Canada, we have determined that under the current Canadian access environment, the likelihood of successfully securing reimbursement for Vanrafia is limited. As such, Novartis Canada has made the decision not to seek reimbursement for Vanrafia in IgAN at this time. “
“The side effect of this policy (MFN) is that we’re not going to be able to access drugs,” says Hladunewich.
It could also mean that drug prices in Canada will have to rise considerably, so that pharmaceutical companies can sell them in the U.S. at current, or higher prices.
“If you end up in a situation where drug prices go up and the public framework doesn’t necessarily support them, there could be consequences in the private [insurance] side as well,” says Behboodi.
“If there’s a major rejigging of pricing, I think you’re going to have a much bigger discussion about public healthcare policy in Canada.”
“The market share in the States is so much larger that it wouldn’t be rational to drop the price of the drug in the U.S. to match the smaller nations,” says Hladunewich, adding, “I think this is going to seriously impact not just renal diseases, but other rare diseases from other organ systems in Canada as well.”
But Hamelin says MFN could also compel the government to start making bigger investments in life sciences and pharmaceutical research and development, as recommended by a recent task force report to the Ministers of Health and Industry .
“Innovative medicines is an investment in people, and we need to look beyond costs to recognize that medicines save lives, save money to the healthcare system and build our economy,” says Hamelin.
CityNews reached out to Canada’s Minister of Health to see which, if any of the taskforce recommendations were being adopted and how specifically Canada would address the US MFN policy.
In a statement, a spokesperson for the Minister of Health tells CityNews: “Our Government is taking action to strengthen Canada’s pharmaceutical capacity, support domestic manufacturing, reduce unnecessary barriers, and encourage innovation across our life sciences sector,” later adding that the government is “creating the conditions for more manufacturers to bring their products to Canada” – in part by starting to streamline some of the approval process and allow certain steps to happen concurrently.
Behboodi expects the next few months to be unpredictable as U.S. politicians try to show progress on lower drug prices south of the border.
“You may end up with lower prices in the United States, which will then have consequences for Canada. My fear is that there’s the drive to deliver before the midterms. We’re going to see a bit more volatility than otherwise.”
Add CityNews Toronto as a trusted source on Google to see more local stories from us.
