Only a national body can help cut our drug costs

Rising drug costs are once again outpacing growth across other areas of health care. In recent years, it appeared this trend had been contained.

Between 1996 and 2006, provincial/territorial expenditures on drugs rose by a whopping 167 per cent. Over the following decade, the increase was only 40 per cent.

Several factors played a role. B.C. led the way with a requirement that physicians prescribe the cheapest medication in any class where patient outcomes were the same. That’s one reason we have the lowest drug costs in the country.

Ontario put an end to a scam between generic-drug manufacturers and pharmacies, whereby the latter got kickbacks for overcharging their patients. B.C. followed this move.

And efforts began at the national level to pool resources and get lower prices by buying in bulk.

But over the past couple of years, several enormously expensive drugs have come on the market that threaten to wipe out all the gains.

One of these medications helps patients with rheumatoid arthritis. The problem is, it costs $70,000 a year.

Another is used to treat hepatitis C. But here, too, the costs are enormous. Some hepatitis-C drugs cost between $80,000 and $95,000 per patient for a 12-week course.

You can see the impact on the Fair PharmaCare budget. Back in 2007, the most commonly reimbursed drugs were used for treating high blood pressure, stomach acid and various mental illnesses. Not only were these fairly cheap, but most were off patent, meaning generic substitutes were available at a far lower cost.

That has changed. The most commonly reimbursed drugs today are almost exclusively for rheumatoid arthritis and hepatitis C. And since hardly any of these are off patent, there are fewer generics to fall back on.

That is the bad news. The worse news is that we are going to see a lot more of this in the future.

As the percentage of Canadians over 65 continues to expand, demand for arthritis treatments will accelerate. In addition, there are new genetically engineered drugs in the pipeline that are likely to be very expensive.

The question is what can be done. Many of the management techniques that controlled costs a decade ago have maxed out. That’s one reason Canada has the thirdhighest drug prices in the world.

Part of the problem is that while the provinces have made some steps toward acting in concert, they remain independent fiefdoms. Most negotiate their own price deals with drug companies, and, ridiculously, sign a nondisclosure statement that prevents the others from knowing what they paid.

This is a chicken-plucking scheme, and the provinces are the chickens. If Quebec, for example, doesn’t know what Ontario settled for, it might offer more. The industry knows this, hence the non-disclosure statement on which companies insist.

The first step is to put an end to this nonsense. Of course, big Pharma won’t like that, which leads to the second step.

The provinces should stop negotiating prices individually, and vest the entire purchasing regime in a national agency. Attempts are being made in this direction, but we’re not there yet.

The third step is where the rubber hits the road. We do not know what it costs to produce a given drug. That means companies can charge whatever the market bears.

If provincial governments are ever going to get a fair shake, they have to use their combined purchasing power and force manufacturers to open their books.

I doubt we could go it alone. We’re not a big enough market. But several states in the U.S. have shown signs of being receptive to get-tough schemes such as this.

And that, I suspect, is our only hope of managing drug costs. We cannot continue in a state of industry-imposed ignorance, when that industry behaves like a cartel.