Ottawa dropped some drug price reforms to meet need for ‘strong’ pharmaceutical industry, health minister says

Health Minister Jean-Yves Duclos stands during question period in Ottawa on March 24.Adrian Wyld/The Canadian Press

The federal government has withdrawn some of its long-promised drug pricing reforms, which would have cut billions from industry profits, to ensure a vibrant pharmaceutical industry in Canada, the health minister said.

On Thursday, Jean-Yves Duclos defended Ottawa’s decision to drastically reduce price changes that the Liberals first promised five years ago and made a feature of their health care policy. The finalized reforms, announced late last week, will shave $2.9 billion from the pharmaceutical industry’s profits over a decade, down from the $8.8 billion initially promised in 2019.

According to some estimates, drug prices in Canada are “either the second or the third highest” in the world, Duclos acknowledged at a press conference in Toronto on Thursday. Despite this, he said his government’s decision to only partially implement its 2019 reforms will still serve to drive a “longer-term fall in drug prices”.

He added that while the government wants to reduce costs for consumers, “we recognize that we need to have a strong pharmaceutical industry in Canada, especially given the lesson we have learned from COVID-19.”

Ottawa cuts drug price reforms that would have cost big pharma billions

Mr Duclos said the government’s decision was good news as it will reduce prices and also “support research, development and production capacity” of pharmaceutical companies.

The new regulations govern the Patented Medicine Prices Review Board. It was created over three decades ago to prevent excessive pricing of patented medicines, but has not been significantly updated since its inception. In 2019, the government said the comprehensive set of regulatory changes proposed at the time were needed to strengthen outdated rules that prevented the council from doing its job.

In its final decision, Ottawa chose to move forward with one of three elements of regulatory reforms it said would lower drug prices. Beginning July 1, the countries Canada looks to for comparison drug prices will be expanded and countries with the highest prices in the world will no longer be used for comparisons.

Plans to include more economic factors when setting prices and requiring companies to disclose net prices (including privately negotiated discounts), rather than the quoted price on the stock exchange which the government says do not reflect the actual cost paid, are set aside.

On Wednesday, Innovative Medicines Canada, the pharmaceutical industry lobby group, welcomed the rollback of some regulations but challenged the decision to go ahead with the new list of comparator countries.

Duclos said further government promises to establish a national drug strategy for rare diseases and the Canadian Medicines Agency will also help reduce costs. These are not new initiatives, but rather policies that the government also unveiled in 2019, which were in addition to the overhaul of the review board regulations.

Once established, the new drug agency is expected to develop a national formulary and negotiate drug prices nationwide. Duclos said Thursday that the agency will be more efficient and help reduce drug costs across Canada.

The official opposition has previously warned against regulatory reforms the government finalized in 2019, saying the government should focus its efforts on strengthening the national life sciences sector.

Despite the partial downfall of the Liberals, Conservative health critic Michael Barrett says the government cannot be trusted to ensure affordable drug costs because it does not adequately fund the health care system existing.

“Canadians continue to share serious concerns about access to lifesaving medicines and there is no new assurance that access to specialty and innovative medicines is secure,” he said in a statement.

NDP Health Critic Don Davies said the government’s “lack of courage” to stand up to the pharmaceutical industry will hurt Canadians’ ability to afford the drugs they need. He said the pharmacare act, negotiated by the NDP in its deal to give support to the minority Liberal government, will help ensure adequate access for Canadians.

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