Can Ot­tawa’s new plan lower drug costs?

The Globe and Mail (Alberta Edition) - - NEWS - KELLY GRANT HEALTH RE­PORTER

Canada pays some of the high­est phar­ma­ceu­ti­cal prices in the world, an is­sue the Health Min­is­ter is vow­ing to fix

From the time Shan­non Costanzo learned her el­dest child, Kait­lyn, had cys­tic fi­bro­sis, she has been “fundrais­ing her butt off,” hop­ing to con­trib­ute to a treat­ment for a lung dis­ease that kills many of its suf­fer­ers be­fore they turn 30.

Ms. Costanzo’s ef­forts are start­ing to feel a lit­tle hol­low now that Kait­lyn’s doc­tors have rec­om­mended the first-grader try a new med­i­ca­tion that tar­gets the ge­netic cause of her ill­ness, but which her fam­ily can­not af­ford.

The drug, Orkambi, has a sticker price just shy of a quar­ter-mil­lion dol­lars a year.

“We had to turn it down and say no be­cause of the price tag,” Ms. Costanzo said from her home in Milton, Ont. “There’s that feel­ing of help­less­ness: I may lose her be­cause I don’t have enough money to save her.”

Orkambi is an ex­treme – and com­plex – ex­am­ple of a prob­lem that fed­eral Health Min­is­ter Jane Philpott is promis­ing to take on. Canada spends more per capita on pre­scrip­tion drugs than any coun­try ex­cept the United States, in large part be­cause Cana­di­ans pay the third-high­est drug prices among the de­vel­oped na­tions of the Or­ga­ni­za­tion for Eco­nomic Co-op­er­a­tion and De­vel­op­ment.

“This is a long time over­due,” Dr. Philpott said. “We have seen a con­tin­ued es­ca­la­tion of not only the cost of in­di­vid­ual phar­ma­ceu­ti­cals, but the over­all amount that Cana­di­ans are pay­ing both through pub­lic and pri­vate pay­ers.”

Dr. Philpott this week un­veiled plans for the first over­haul in 30 years of the Patented Medicine Prices Re­view Board, a lit­tle­known reg­u­la­tor that has al­ready con­ceded it is strug­gling un­der its mouldy rules to keep prices in check. In an in­ter­view with The Globe and Mail, she also hinted that the gov­ern­ment will beef up the fed­eral-pro­vin­cial-ter­ri­to­rial al­liance that ne­go­ti­ates dis­counts on drug prices and, more sig­nif­i­cantly, even­tu­ally con­sider a na­tional list of essential medicines that would be cov­ered for every Cana­dian, re­gard­less of age or in­come.

Drug-pol­icy ex­perts say the lat­ter idea, which Dr. Philpott cau­tioned is a long way off, would let Canada use that na­tional pur­chas­ing power to drive harder bar­gains with drug com­pa­nies. But un­less or un­til Ot­tawa and the pro­vin­cial and ter­ri­to­rial gov­ern­ments agree to that, Canada is stuck with a patch­work of pri­vate and gov­ern­ment drug plans that leave it at a sig­nif­i­cant price dis­ad­van­tage com­pared with coun­tries that have some ver­sion of na­tional phar­ma­care.

Against that back­drop, Dr. Philpott is start­ing with some­thing her gov­ern­ment can change now: The reg­u­la­tions gov­ern­ing the Patented Medicine Prices Re­view Board. The re­view board was cre­ated in 1987, when the fed­eral gov­ern­ment agreed to strengthen patent pro­tec­tion for new drugs in ex­change for phar­ma­ceu­ti­cal com­pa­nies in­vest­ing the equiv­a­lent of 10 per cent of sales in re­search and de­vel­op­ment in Canada. How­ever, such in­vest­ment has ac­tu­ally dropped to a low of 4.4 per cent.

The price-re­view board was sup­posed to act as a check against drug mak­ers us­ing their longer patent-pro­tec­tion pe­ri­ods to charge ex­ces­sive prices. The board can or­der com­pa­nies to drop their prices if it deems them to be too high and to pay back the dif­fer­ence to the gov­ern­ment.

“Ex­ces­sive” was de­fined nar­rowly as higher than the me­dian price charged for a brand-name medicine in seven other coun­tries: France, Ger­many, Italy, Swe­den, Switzer­land, Bri­tain and the United States, which has the high­est drug prices in the world.

Health Canada re­leased a pro­posal this week for chang­ing the reg­u­la­tions that would drop the United States and Switzer­land, an­other ju­ris­dic­tion with high prices, from the list and add seven new com­para­tor coun­tries where prices tend to be lower.

Chang­ing the list of bench­mark coun­tries is a good start, but won’t suc­ceed on its own, ac­cord­ing to Steve Mor­gan, a health econ­o­mist at the Univer­sity of Bri­tish Columbia. “If we think we’re go­ing to rely on in­ter­na­tional price com­par­isons alone for keep­ing prices low in Canada,” he said, “we’re fool­ing our­selves.”

In the murky world of in­ter­na­tional phar­ma­ceu­ti­cal pric­ing, the list price is more like the sticker price at a deal­er­ship than it is a true price. Like car buy­ers, large pay­ers such as pri­vate in­sur­ers and gov­ern­ments ne­go­ti­ate dis­counts off the list price. The price-re­view board com­pares list prices in Canada with those in other coun­tries; as long as phar­ma­ceu­ti­cal com­pa­nies in­flate their list prices ev­ery­where, Canada’s drug-price caps will re­main high.

Health Canada is con­sid­er­ing forc­ing drug mak­ers to pro­vide their dis­counted Cana­dian prices in con­fi­dence to the price-re­view board, but it’s un­clear what ef­fect that would have if the board can’t get its hands on the real prices in the 12 com­para­tor coun­tries be­cause they are part of con­fi­den­tial deals.

That’s why the depart­ment is look­ing at other ways to de­fine ex­ces­sive prices, in­clud­ing tak­ing into con­sid­er­a­tion Canada’s gross do­mes­tic prod­uct, the size of the mar­ket for each drug, and the pos­si­bil­ity of mea­sur­ing the drugs’ value for money.

The Cana­dian Agency for Drugs and Tech­nol­ogy in Health (CADTH), which is funded by gov­ern­ments, eval­u­ates new medicines that way, then ad­vises the prov­inces and ter­ri­to­ries on whether to cover them.

In the case of Orkambi, CADTH rec­om­mended against pub­lic fund­ing, say­ing there was not enough ev­i­dence of a sig­nif­i­cant clin­i­cal ben­e­fit, es­pe­cially when the twice-a-day tablet regime costs $248,988 a year.

As a re­sult, the pan-Cana­dian Phar­ma­ceu­ti­cal Al­liance, which ne­go­ti­ates group dis­counts on be­half of Canada’s pub­lic drug plans, is re­fus­ing to en­gage in talks with Ver­tex, the drug’s Bos­ton-based maker.

John Wal­len­burg, the chief sci­en­tific officer for Cys­tic Fi­bro­sis Canada, a char­i­ta­ble ad­vo­cacy or­ga­ni­za­tion, said CADTH’s re­view un­der­es­ti­mated the po­ten­tial ben­e­fits of Orkambi.

Dr. Wal­len­burg, whose daugh­ter died of cys­tic fi­bro­sis, said re­search showed Orkambi helped in­crease lung ca­pac­ity and re­duce hos­pi­tal­iza­tions in one in four pa­tients, but it was im­pos­si­ble to pre­dict who would ben­e­fit un­til pa­tients tried it. (Cys­tic Fi­bro­sis Canada re­ceives money from the phar­ma­ceu­ti­cal in­dus­try, in­clud­ing from Ver­tex, but a spokesman said in­dus­try fund­ing ac­counts for less than 2 per cent of the or­ga­ni­za­tion’s gross rev­enue and does not “un­duly in­flu­ence” its po­si­tions.)

Shan­non Costanzo won­ders if Kait­lyn might be one of the for­tu­nate pa­tients for whom Orkambi works. Right now, she can­not find out be­cause her hus­band’s work­place in­sur­ance cov­ers a max­i­mum of $20,000 a year for her daugh­ter.

Could the pro­posed changes at the price re­view board re­duce the cost of Orkambi? It’s hard to say.

“Hope­fully, us­ing coun­tries that are get­ting lower prices for th­ese med­i­ca­tions will help to set the price ceil­ings at a more rea­son­able place,” said Nav Per­saud, a staff physi­cian and as­so­ciate sci­en­tist at St. Michael’s Hos­pi­tal in Toronto. “One ques­tion, though, is why aren’t we get­ting the best prices?”

Ver­tex de­clined to di­vulge the price it lists for Orkambi in other coun­tries, but a re­port from Bri­tain’s equiv­a­lent of CADTH put the an­nual list price there at about $185,000 – lower than in Canada, but still well out of reach for the Costanzo fam­ily.

“Who comes up with that price tag and can go to bed at night and sleep?” Ms. Costanzo said. “It just blows my mind.”

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