Cheaper prescription drugs are a bit like apple pie: sure to please just about everyone.
But if lower prices come at the expense of access to potentially life-saving new medicine, that’s not quite so appetizing.
Unfortunately, it seems that bureaucrats in Ottawa are about to serve us precisely this trade-off.
It all starts with a little-known federal agency, the Patented Medicine Prices Review Board (PMPRB). Its role is to monitor drug prices while they’re still under patent law protection to ensure Canadian consumers don’t get gouged.
So far, this sounds pretty reasonable.
But the new guidelines the agency will use to determine whether the price of a new medication is acceptable or too high are so unclear that both pharmaceutical companies and patients’ rights groups are united in their criticism of them.
For instance, last December, the Canadian Organization for Rare Disorders (CORD) wrote a stern letter strongly criticizing the PMPRB’s stubbornness and its unwillingness to listen during the consultation process.
The organization takes issue with the fact that the PMPRB’s singular focus on lowering prices has increasingly left Canada at the back of the line when new medicines are being launched. In its own words, “This has been especially damaging to individuals living with rare diseases with progressive and life-threatening conditions for which there are few or no effective therapies.”
Similarly, the Health Charities Coalition of Canada is voicing concerns about the impact these new guidelines would have on our access to new and innovative treatments, as are the Quebec Pulmonary Association and Cystic Fibrosis Canada.
We could go on listing patient and other advocacy groups, but you probably get the point. Patients fear the PMPRB’s proposed guidelines, as written, would leave us behind when new medication gets launched.
Their concern is understandable. After all, the process from development to regulatory approval for new medication is quite an expensive one. It has been estimated to cost anywhere from US$161 million to US$4.54 billion to bring a new drug to market.
And that’s just the money that needs to be spent before doctors can even be informed of a drug’s existence. And it doesn’t always work either. Clinical trials could show a drug is ineffective or unsafe, and the process will need to start all over again from scratch.
In part due to these high yet variable development costs, new treatments can range wildly in price, but typically start out on the more expensive side and progressively become less expensive as development costs get reimbursed.
By making its price control mechanism murkier, the PMPRB risks making pharmaceutical companies more risk-averse when choosing to launch new treatments here. Since it’s unclear what constitutes an excessive price, and companies prefer not to have to fork over millions of dollars in fines if a price is later deemed excessive, the concern is that they would launch new products in markets with less pricing regulation first and wait to ramp up production further before making them accessible here.
This would mean that Canadians might not be able to access the innovative life-saving medicines they need and that are available elsewhere in the world.
Indeed, the effect of price ceilings and such regulations on access to new treatments is quite well documented.
In response to the PMPRB’s plans to overhaul its pricing evaluations practices, two University of Toronto professors sought to re-evaluate and update the scientific literature regarding the relationship between drug prices and launch dates in OECD countries.
Their results align with historical research: countries that allow for higher launch prices tend to have access to new medicines faster than those that don’t.
And this extra delay the PMPRB risks adding with its new guidelines is of particular importance in the Canadian context, where we are already typically very slow at getting access to and approving new treatments.
From the time products got their global launch, it took an average of 569 days to launch them in Canada during the last decade. Just south of the border, that delay is not even one-third as long.
This results in Canadian patients waiting, on average, over one year longer to get access to new treatments compared to their American counterparts. And that’s before the PMPRB’s proposed guidelines make it even less attractive to launch products here first.
When both patient advocates and industry representatives express the same fears, it’s a good sign the bureaucrats have gotten it wrong and need to go back to the drawing board. The PMPRB should scrap its current proposal and start over. After all, cheaper medicine isn’t worth much if we can’t get access to it.
Krystle Wittevrongel is a senior policy analyst at the Montreal Economic Institute.