PRESERVING CANADA’S STATUS FORHEALTH CARE INNOVATION AND INVESTMENT
Every time you pick up a prescription at the pharmacy, you likely examine the receipt. There is no doubt that some medicines can be expensive, especially the high-tech medicines for lifethreatening diseases. While the prices are sometimes high, so is the value they provide for health care systems, the economy and, most importantly, for Canadian patients and their families. Presently, however, new proposed changes to the way prescription medicines are priced may make it more difficult for Canadians to access these therapies.
The price of new medicines reflects a lot of things. A 2016 Tufts University study concluded that on average, it costs US$ 2.6 billion to bring a new medicine from research and development ( R& D), through clinical trials and regulatory approvals, to patients. This process takes 10 years on average, and only one of 12 medicines makes it all the way through to patients. Many of the investment dollars are spent creating highvalue jobs and advancing innovation in universities and in research centres globally. Given that Canadian governments have prioritized innovation, and because we have world-class researchers and research facilities, many of those research dollars can, and should, be invested here.
“The i nnovative pharmaceutical industry understands the opportunity that innovation presents every day, across the country,” says Pamela Fralick, president, Innovative Medicines Canada (IMC). “We want to continue attracting investment in research and development in Canada to find the next generation of medicines for patients.”
HOW CANADA SETS DRUG PRICES
Most Canadians don’ t know that the maximum prices of new drugs are not controlled by manufacturers but by a government agency called the Patented Medicine Prices Review Board ( PMPRB), set up in 1987 to protect Canadians from excessive drug prices and to monitor research investments. According to the 2016 PMPRB annual report, Canadian prices that year were stable at -0.5 per cent growth, and declined in comparison with our international comparators.
The PMPRB’s data on international pricing ranks Canadian prices fourth when compared with seven other countries. Canada sits in the middle rank, behind the United States, Germany and Switzerland, essentially tied with the United Kingdom and ahead of Sweden, Italy and France, a ranking that has been largely unchanged since 2001.
The PMPRB’s mandate has remained unchanged, but the government recently unveiled draft regulations which would significantly change the way that the agency functions. For example, one proposal is to remove countries with higher prices from the PMPRB’s international comparators and to also include some other countries with lower prices, with the effect of lowering the overall average price as calculated using the comparator nations.
Fralick says by making pricing containment the main focus, there is a risk it could upset the balance in terms of access to medicines for patients.
“There is a clear connection between the price of innovative medicines and the industry’s ability to launch new medicines in Canada,” says Fralick.
At t he moment, more than 60 per cent of new medicines launched in key global markets are available in Canada. That compares to 40 per cent in Australia and 30 per cent in South Korea — two of the nations included in PMPRB’s proposed new basket of comparator nations. Ultimately, this means there is a risk of reducing access to new medicines in Canada — which is a high price to pay for patients and their families.
While industry wants to work with Canadian governments facing serious health care sustainability challenges, the proposed changes are a source of considerable uncertainty given the consequences it may have for life sciences investments and the introduction of new medicines in Canada.
HEALTH CARE R & D
At the time of PMPRB’s f ounding 30 years ago, pharmaceutical companies agreed to spend 10 per cent of total sales revenue on innovation. In recent years, the PMPRB has reported that the companies have not been investing to the agreed-upon level based on the research and development definition that it must apply. However, this definition was established in 1987, and it does not capture new and innovative ways of investing, such as money for research chairs at universities and initiatives like JLABS@Toronto, a life science incubator, and a collaboration between Johnson & Johnson Innovation, Janssen Inc., University of Toronto, MaRS and the Government of Ontario.
A recent analysis by EY found that members of IMC invested 9.97 per cent of their 2016 sales into research and related investments. These companies also support 30,000 high- value jobs and contribute $19 billion to Canada’s economy.
Ultimately, the balance on pricing that will enable continued investment in Canadian innovation and bring new medicines to Canada will require enhanced cooperation between governments and industry. Other countries have adopted creative approaches to achieve their economic and social policy objectives in a manner that provides industry with the stability that it needs for business planning and future investments. In Europe, for instance, there are numerous examples of framework agreements between the industry and national governments that could be considered for Canada.
“Greater access and affordability to new medicines are not mutually exclusive,” says Fralick.
“I know that by working together, we can help Canadian governments with their health- care budget challenges while preserving Canada’s status as a toptier country for launching new medicines and for clinical trials, which benefit our economy and most importantly, patients.”