Don’t let price controls delay access to a vaccine

The media, together with some governments and academics, have optimistically suggested a COVID-19 vaccine could be available in 12 to 18 months. That’s not impossible. It took just days to sequence the virus and only hours to synthesize its complete RNA genome. But it would be remarkable, 10 to 15 years being the norm for creating a new vaccine.

Whether a vaccine comes quickly or not, the assumption seems to be it will become available in Canada as soon as it can be mass produced. But will it? In July, revisions to the regulations governing the Patented Medicine Prices Review Board (PMPRB) come into force that will radically increase that board’s control of drug and vaccine prices in Canada and could significantly delay access.

Before a vaccine can be authorized for use, its development normally progresses through four main stages: initial discovery, preclinical analyses, testing in humans and regulatory review. Many potential candidates may be identified but few make it through to clinical testing and even fewer to actual use.

Under current regulations, once a vaccine’s use is authorized, provinces rely on recommendations from the national advisory committee on immunization when making decisions about publicly funded access. That committee’s members include experts in infectious diseases, immunology, microbiology, public health, and pharmaco-economics. To ensure fair pricing, vaccines are procured in competitive tendering in which the lowest bidder — assuming more than one vaccine is available — is granted a majority share of the contract to supply provinces, usually 60 per cent.

However, vaccines will be subject to the PMPRB’s new regulations, which include the need for a price reduction if sales exceed certain thresholds. Because sales can only be assessed retrospectively, a contract won in tendering to supply a specified number of doses at a specified price could later be overturned. Unless Ottawa guarantees the price or postpones the PMPRB revisions manufacturers will not know whether a tendered price is compliant with the new regulations before marketing a vaccine.

This uncertainty may be a major disincentive to bringing a new vaccine to Canada. Global manufacturing capacity is limited and demand for a vaccine will be significant. After heavily investing in a vaccine’s development, a company will expect a reasonable return. Will a manufacturer want to bring a COVID-19 vaccine to Canada if its tendered price can be reduced by the PMPRB?

Manufacturers voiced their concerns during the recent consultation on the PMPRB draft guidelines. The Vaccine Industry Committee of BIOTECanada, the national association of biotechnology companies, wrote that, “If a new vaccine emerged (e.g., coronavirus vaccine) within a global public health threat, the uniquely Canadian requirements, as proposed in the draft guidelines, would negatively affect a potential new vaccine candidate and could result in issues of access and supply.” Even the Public Health Agency of Canada’s Centre for Immunization and Respiratory Infectious Diseases is concerned about vaccines coming under the PMPRB’s price guidelines.

New vaccines require money to be found in federal and provincial budgets. For a COVID-19 vaccine, that shouldn’t be a problem, given the seriousness of the threat. But, given the number of initiatives underway worldwide, it is unlikely that a COVID-19 vaccine will be a Canadian discovery, despite federal government funding for vaccine and antibody research. And if a vaccine were discovered here, commercialization almost certainly would require a global manufacturer.

Nor is a vaccine likely to be manufactured in Canada, even after recent revisions to the preclinicalgs Act that would permit the federal government to make regulations to prevent therapeutic product shortages. In theory, Ottawa could use compulsory licensing to give approval to a generic company to produce a medicine covered by a patent. But generic companies are extremely unlikely to take up the challenging task of making vaccines, which are complex biotechnology products made by only a limited number of manufacturers.

It’s much more likely that Ottawa will have to source a vaccine from Europe, the United States or perhaps China. But manufacturers based in these countries are unlikely to prioritize supplying Canada, particularly if their price is at risk. Unless the government postpones the PMPRB revisions or exempts a COVID-19 vaccine, manufacturers will choose to sell what is likely to be a limited supply to other countries for guaranteed prices before considering Canada.

After its mismanagement of the supply of personal protective equipment, Ottawa needs to get ahead of the potential for delayed or denied access to a COVID-19 vaccine. Canadians will not forgive a government whose preoccupation with drastically reducing the prices of new medicines and vaccines allows coronavirus to continue endangering their physical, mental and financial well-being longer than necessary.

Nigel Rawson is president of Eastlake Research Group and an affiliate scholar with the Canadian Health Policy Institute. Olaf Koester is managing partner and principal, OHWK Business Management Advisory.