NEWS RELEASE: Access to new medicines in Canada, Europe, and the United States: Study finds less availability and longer waits for Canadian patients

TORONTO, April 11, 2024 (GLOBE NEWSWIRE) — A recent study published by the Canadian Health Policy Institute examined the availability and wait times for access to new drugs, accounting for product launches, marketing authorizations, and insurance coverage under publicly funded drug plans in Canada, Europe, and the United States.

Data showed that Canada was a low priority market for new drug launches. The number of new drug applications submitted in Canada was only 54% of the number launched in the United States, and 62% of those launched in the European Union.

Health Canada subsequently approved fewer new drugs compared to the European Medicines Agency and the US Food and Drug Administration. Only 69% of the new drugs authorized for marketing in the United States were also approved in Canada. Of the drugs authorized for marketing in the EU, 78% were also approved in Canada.

On average, Canada’s public drug plans covered only 12% of the new medicines covered by US Medicare part D drug plans, and 14% of the new drugs covered by European public drug plans.

In total, publicly insured Canadians waited an average of 4 years to access new drugs, from the first date that a new drug application was launched in any of the 3 markets, to the date the drug was positively listed on the formulary of a public drug plan. This was 2.5 years longer than Americans insured under Medicare, and 2.2 years longer than publicly insured Europeans.

The study recommends 4 policy options to address the lack of access to new medicines in Canada:

  • Health Canada should automatically and immediately recognize new drug approvals occurring first in either the EMA or the FDA. Regulatory harmonization could have potentially made an additional 171 new drugs available to Canadians and could have reduced the overall wait by 2 months.
  • Canada should adopt the German model and allow immediate interim insurance coverage for new medicines following marketing authorization, with permanent insurance coverage pending the outcome of post-market price and reimbursement negotiations. This could have reduced wait times by more than 2 years.
  • The federal government should end its price control regime. Research has shown that price regulation is a significant disincentive in company decisions about prioritizing markets for new drug launches.
  • Patent term restoration should compensate pharmaceutical companies for regulatory approval delays, and subsequent delays caused by HTA, price and reimbursement negotiations.

The study is available free of charge at www.canadianhealthpolicy.com.

Media contact: CHPI@canadianhealthpolicy.com

NEWS RELEASE: Cost control rationale for pharmacare does not stand up to scrutiny

TORONTO, March 14, 2024 (GLOBE NEWSWIRE) — The latest edition of an annual study from the Canadian Health Policy Institute concludes that the cost control rationale for national pharmacare is not supported by the facts.

The Liberal–NDP coalition recently announced that Ottawa would work with the provinces to publicly fund universal prescription drug benefits for contraceptives and diabetes medications. It is a symbolic step toward a national pharmacare program that will replace existing public and private drug plans.

NDP leader Jagmeet Singh told media that a single payer system is needed to control the cost of new drugs, which are also known as innovative or patented medicines, and that a pharmacare monopsony could negotiate lower prices through “bulk buying”.

The founder and CEO of the Institute and author of the study, Brett Skinner said, “It is doubtful that a single payer would have substantially more bargaining power because each province already has a monopsony for public reimbursement, and Canada already has a national bureaucracy devoted entirely to controlling the cost of patented medicines.”

Several quasi-governmental agencies are engaged in price regulation (Patented Medicine Prices Review Board or PMPRB), health technology assessment (Canadian Agency for Drugs and Technology in Health), monopsony bargaining (Pan-Canadian Pharmaceutical Alliance), and centralized vaccine procurement (Public Health Agency of Canada). Plus, there are initiatives underway for a federal super bureaucracy (Canada Drug Agency).

Skinner argues, “Bulk buying is a nonstarter because it would require government to directly purchase, store and distribute products. Drug plans just reimburse pharmacies for the prescription expense claims of eligible beneficiaries.”

“To achieve savings from scale, a single payer would exploit its monopsony on public reimbursement, to extract rebates from manufacturers. It would essentially delay or deny our access to new medicines as leverage to squeeze the pharmaceutical companies on prices.”

A 2017 report from Ontario’s Auditor General, found the province’s drug plan negotiated rebates averaging 36% off list prices for patented drugs. Pharmacare advocates are betting a single payer can demand deeper discounts without jeopardizing the availability of new medicines in Canada.

According to Skinner, “It’s a risky gamble, because research confirms that excessive price regulation or abusive monopsony bargaining can destroy the commercial viability of introducing new drugs to markets.”

His analysis suggests single payer pharmacare is unlikely to produce significant savings on patented drug costs because prices and total expenditure are not out of control. Skinner examined data from CIHI and PMPRB over the 33 years from 1990 to 2022.

He found that Canadian prices for patented drugs are moderate compared to other countries.

According to the PMPRB 2022 Annual Report, bilateral foreign-to-Canadian comparisons of patented medicines using matched products at purchasing power parity, showed average prices were higher in seven of the 11 other reference countries. The average price ratio across the seven countries was 22.3% higher than Canada.

The PMPRB no longer compares prices from the United States and Switzerland because they are deemed to be “high cost” jurisdictions, but it is expected they would exceed Canada. Which means that Canada ranked 10th of 14 current and former high-income PMPRB reference countries.

Skinner’s analysis also showed that the direct cost of patented drugs is much less than commonly believed.

The Canadian Institute for Health Information (CIHI) reported national (public and private) spending on drugs totaled $49.4 billion in 2022, including retail and hospital expenditure. However, the numbers include direct and indirect costs like non-patented drugs, non-prescribed drugs, pharmacist fees, public drug plan administration, and even R&D spending by pharmaceutical companies. CIHI also excludes rebates negotiated between manufacturers and public drug plans.

Precise data from the PMPRB annual report, show gross national sales of all patented drugs at manufacturers list prices were $18.4 billion in 2022, which represents only 37% of the total drugs and related expenditures reported by CIHI.

Skinner’s analysis indicated that the total cost of patented drugs is only a small fraction of total public and private health spending in Canada. After accounting for rebates, net national expenditure on patented medicines totaled $15.6 billion, or only 4.7% of $334.4 billion in overall national health expenditure in 2022.

In the same year, net public (provincial/territorial/federal drug plans, workers compensation boards, and mandatory social insurance and health premiums) spending on patented medicines was $5 billion, or only 2.1% of $239.9 billion in total public health expenditure.

Skinner also said, “Considering the benefits of pharmaceutical innovation, we should probably be spending a bigger share of health expenditures on new medicines. Pharmaceuticals are often the most efficient, and sometimes the only means for treating patients. It is hard to imagine how physicians and hospitals would deliver modern medical care without pharmaceuticals.”

“Patented medicines represent the latest therapeutic advancements produced by an expensive, time-consuming, continuous process of incremental pharmaceutical innovation. Excessive cost controls for patented medicines are counterproductive.”

“It appears unlikely that the current government will rethink its pharmacare policy. However, if a future government wishes to consider it, there are alternative ways of closing drug coverage gaps without disrupting existing public or private drug plans, and at a fraction of the cost estimated for national pharmacare.”

Contact:

Brett Skinner, PhD
CEO, Canadian Health Policy Institute
Editor, Canadian Health Policy Journal
brett.skinner@canadianhealthpolicy.com
www.canadianhealthpolicy.com

Globe and Mail, CBC, Global News cite CHPI research on cross-border re-sale risks to Canada’s drug supply

Readers,

I want to bring to your attention a recent example of the power of evidence based research to influence public policy thinking in Canada. CHPI was recently recognized as a leading source of evidence and advocacy on the issue of Canada’s drug supply by prominent media including Global News, CBC, and the Globe and Mail. The institute published two important empirical econometric studies on this topic in September 2019 (shown below). Both warned of the risks to Canada’s drug supply from cross-border re-sales to US customers of medicines meant for use by Canadian patients, and both predicted that the most likely response from Canadian provincial and federal governments would be to ban the export of drugs experiencing shortages. Recent events described in the news items pasted below vindicate our analyses.  Thank you for subscribing to Canadian Health Policy journal. With the resources raised from these sales we are able to conduct and publish research that informs the discussion of health policy in Canada!  

Brett Skinner, Editor

Articles published in CHPJ: 

New pathways for U.S. importation threaten Canadian prescription drug supply.

Marv Shepherd, PhD | University of Texas at Austin | SEP 2019

Potential impact of U.S. demand on the Canadian supply of 46 prescription drugs.

Brett Skinner PhD | Canadian Health Policy Institute | SEP 2019

CHPI in the news:

U.S. eats into Canada’s Ozempic dose supply. Here why it’s an issue | Globalnews.ca
Global News
Organizations such as the Canadian Pharmacists Association and the Canadian Health Policy Institute have been sounding the alarm about possible …

Ozempic shipments to U.S. leave Canadian pharmacists fearing impact on drug supply
CBC
Organizations such as the Canadian Pharmacists Association and the Canadian Health Policy Institute have been sounding the alarm about possible …

Globe editorial: The rush by Americans to buy a weight loss drug from Canadian pharmacies …
The Globe and Mail
… such as the Canadian Health Policy Institute have warned for years that Canada needs effective regulation to avoid critical drug shortages.

Rush for diabetes and weight-loss drug Ozempic puts cross-border sales in spotlight
The Globe and Mail
Founder, CEO of the Canadian Health Policy Institute says B.C.’s bid to restrict cross-border sales of Ozempic was right move.

Patented Medicines Expenditure in Canada 1990–2020: what does the evidence show?

Patented Medicines Expenditure in Canada 1990–2020

ATTRIBUTION
This legacy paper is corporately authored and edited based on proprietary template models and methods that are intended to facilitate regular updates. The design and content are a cumulative reflection of the diverse contributions collectively attributable to the CHPI affiliated researchers who may have variously participated in updating each edition. Data sources, methods and editorial presentation may evolve from previous editions.

CONTRIBUTORS
Brett Skinner, PhD, Canadian Health Policy Institute (CHPI)

ACKNOWLEDGMENTS
CHPI is grateful for the past contributions to the conceptual and analytical development of this paper by Mark Rovere, PhD Candidate, Canadian Health Policy Institute (CHPI).

EDITION
This is the 7TH edition of this paper to be published as a CHPI research series. It builds on the concepts and methods from the original paper: Skinner BJ (2012). Drugs and the public cost of healthcare in Canada, 1974-1975 to 2011-2012. Canadian Health Policy, November 27, 2012. Toronto: Canadian Health Policy Institute.

CITATION
Canadian Health Policy Institute (CHPI) (2022). Patented Medicines Expenditure in Canada 1990–2020. 7th Edition. Canadian Health Policy, JUN 2022. ISSN 2562-9492, https://doi.org/10.54194/CZXJ1621, canadianhealthpolicy.com.

EDITORIAL SUMMARY

Federal, provincial, and territorial governments claim to be committed to evidence-based policymaking. The reality is that government policies are often based on faulty evidence or unproven assumptions, which can lead to unnecessary, expensive and harmful policy choices.

Canadian pharmaceutical policy is built on the assumption that excessive prices for patented medicines are a major cause of the growth in national health expenditures (NHEX).

As a result, the country has constructed a multi-layered bureaucracy to control the cost of patented medicines. Currently several government agencies are involved in price regulation, health technology assessment, monopsony bargaining, formulary gatekeeping, and centralized procurement, plus there are proposals for a new national drug agency, a single national formulary, and national public drug insurance (pharmacare).

But the public discussion of pharmaceutical policy is afflicted by a perennial information deficit regarding the magnitude of spending on patented medicines. Policymakers, experts and media routinely misinterpret drugs expenditures reported by the Canadian Institute for Health Information (CIHI), to be mostly attributable to patented medicines. This is problematic because CIHI does not report patented medicines costs. Accurate data are available from the Patented Medicine Prices Review Board (PMPRB), and the numbers differ significantly from those reported by CIHI.

This study reconciles the data differences and explains the implications for Canada’s pharmaceutical policy logic. The analysis tests the empirical validity of the assumption that the prices of patented medicines are a major driver of national health expenditure growth. It uses publicly available data from government sources including CIHI, the PMPRB, and Statistics Canada. Patented medicines expenditures are examined in comparison to the rest of NHEX, and after accounting for changes in population, inflation, and economic growth. Estimates are provided before and after accounting for public sector rebates and exclude temporary expenditures on COVID-19 emergency response.

According to PMPRB, gross national sales of patented drugs were $17.5 billion in 2020 before accounting for public sector rebates, representing only 40% of the $44.0 billion combined total reported by CIHI for spending on retail and hospital drugs, and only 6.5% of the $271 billion total national health expenditures in 2020. From 1990 to 2020 gross sales of patented medicines have never exceeded 8% of NHEX.

After accounting for public sector rebates, national expenditure on patented medicines totaled $14.9 billion in 2020, representing only 33.8% of total drugs expenditures reported by CIHI, and 5.5% of total national health expenditures.

CHPI’s analysis shows that, when the correct data are examined in a proper economic context, national expenditures on patented medicines are objectively affordable and sustainable.

So then, why do policymakers myopically focus on controlling the prices of patented medicines instead of other types of healthcare expenditures? The information deficit is one explanation. Governments also probably find it technically easier to regulate pharmaceutical products than to improve efficiency in hospitals and physician care. Moreover, imposing an economic loss on pharmaceutical companies has less political costs for governments than targeting hospitals and health professionals. The focus on the prices of patent medicines is also partly explained by industrial nationalism. The innovative pharmaceuticals industry is comprised mainly of foreign multinational companies. Canadian policymakers view public expenditure on patented medicines as a cost burden for Canadian taxpayers and an income transfer to American and European pharmaceutical companies.

The disproportionate focus on price controls raises the risk of serious unintended consequences. Evidence suggests that excessive price controls are a disincentive to launch new drugs and to invest in research and development in markets. If governments want to ensure that Canadians have early access to new medicines, and want to attract foreign direct investment to Canada, the excessive focus on price controls is counterproductive.

Price controls are not costless. Administering the price control regime consumes significant public resources that could be saved or spent to improve access to under-funded therapies. A quick review of annual financial statements for three price control agencies shows the direct cost of price regulation and HTA was over $82 million in 2020, excluding the health and economic costs of delays to launching new drugs and listing them on public formularies.

The paper concludes with a discussion of an alternative approach to price regulation of patented medicines using Germany as a model for Canada. Germany’s approach to pharmaceutical pricing is based on structured negotiation instead of regulation and is designed to allow immediate interim public insurance coverage of new medicines following marketing authorization, with permanent insurance coverage pending the outcome of negotiations.

While it is important for governments to manage public finances responsibly, the incremental cost of providing insured access to patented drugs must be weighed against the benefits in a broader economic context. Pharmaceutical innovation improves patient health outcomes, reduces potential health system costs, and reduces indirect societal costs like economic productivity losses from untreated or under-treated illness. The impact of excessive price regulation on the availability of patented medicines jeopardizes the potential benefits to be gained from greater utilization of new drugs. Instead of focusing on controlling the prices of patented medicines, policymakers should be trying to capture the value of therapeutic innovation.

Patent term erosion and the availability of new medicines in Canada 2000-2022

Patent term erosion and the availability of new medicines in Canada 2000-2022

CONTRIBUTORS
Brett Skinner, PhD, Canadian Health Policy Institute (CHPI)

ATTRIBUTION
This legacy paper is corporately authored and edited based on proprietary template models and methods that are intended to facilitate regular updates. The design and content are a cumulative reflection of the diverse contributions collectively attributable to the CHPI affiliated researchers who may have variously participated in updating each edition. Data sources, methods and editorial presentation may evolve from previous editions.

EDITION
This is the first edition of this paper to be published as a CHPI research series. It builds on the concepts and methods from the original paper: Skinner BJ (2016). How long do new patented medicines have market exclusivity in Canada’s public drug plans? Canadian Health Policy, August 16, 2016.

CITATION
Canadian Health Policy Institute (CHPI) (2022). Patent term erosion and the availability of new medicines in Canada 2000-2022. Canadian Health Policy, MAY 2022. ISSN 2562-9492, https://doi.org/10.54194/JWIE7735, canadianhealthpolicy.com.

ABSTRACT
This study estimated how long new drugs are covered under federal and provincial public drug insurance plans while protected by an active patent. New drugs (or medicines) were defined as patented drug products designated as new active substances and authorized for marketing in Canada between 1 January 2000, and 15 April 2022. Results showed that for the new medicines that were eventually covered under public insurance plans, the number of years of public reimbursement eligibility while under an active patent averaged 6.7 years, implying the loss of 13.3 years of commercially viable time under patent protection. The erosion of patent protected time under public insurance coverage has significantly reduced the economic value of a pharmaceutical patent in Canada and has likely created disincentives for pharmaceutical companies to prioritize the introduction of new medicines in Canada. The impact of patent term erosion on the availability of new medicines has potentially significant implications for population health in Canada. Feasible policy remedies include regulatory harmonization, expedited insurance coverage, and full patent term restoration.

Waiting for new medicines in Canada, Europe and the United States 2016-2021

Waiting for new medicines in Canada, Europe and the United States 2016-2021

CONTRIBUTORS
Mark Rovere, PhD candidate, Canadian Health Policy Institute (CHPI)
Brett Skinner, PhD, Canadian Health Policy Institute (CHPI)

ATTRIBUTION
This paper is corporately authored and edited based on proprietary template models and methods that are intended to facilitate regular updates. The design and content are a cumulative reflection of the diverse contributions collectively attributable to the CHPI affiliated researchers who may have variously participated in updating each edition. Data sources, methods and editorial presentation may evolve from previous editions.

CITATION
Canadian Health Policy Institute (CHPI) (2022). Waiting for new medicines in Canada, Europe and the United States 2016-2021. Canadian Health Policy, APR 2022. ISSN 2562-9492 https://doi.org/10.54194/SPOS4023 canadianhealthpolicy.com.

INTRODUCTION

Pathway to Access a New Drug in Canada

It takes a long time to successfully develop a new drug that will prove safe and effective for use by patients. A 2016 estimate based on the United States experience found that the time between the start of clinical testing of a novel drug molecule, and submission of a new drug application for marketing authorization was 80.8 months or 6.7 years. However, the end of the research and development phase is just the beginning of the wait for access to new medicines caused by government policies affecting the geographic priority for new drug launches, regulatory approvals, and reimbursement processes.

Getting access to a successfully developed new drug under a public drug plan in Canada is a particularly complex and time-consuming bureaucratic process. Before a new drug can be sold in Canada, it must be authorized for marketing by the federal regulatory agency Health Canada, which reviews the clinical evidence to assess and certify the safety and therapeutic effectiveness of the product.

The prices of new medicines are also federally regulated by a quasi-judicial agency known as the Patented Medicine Prices Review Board (PMPRB). PMPRB reviews the clinical evidence to determine the applicability of price control guidelines and sets the ceiling price for new drugs using international, domestic, and therapeutic reference prices.

Further, new drugs are subject to health technology assessment (HTA) by the Canadian Agency for Drugs and Technology in Health (CADTH), which again reviews clinical evidence to assess the cost-effectiveness of the product and make recommendations regarding reimbursement on behalf of all federal and provincial public drug plans, except Quebec which utilizes its own HTA agency known as the Institut national d’excellence en santé et en services sociaux (INESSS).

Manufacturers of new drugs then enter price negotiation with the pan-Canadian Pharmaceutical Alliance (PCPA), which acts as a monopsony on behalf of every federal and provincial public drug plan. Under the direction of their respective Ministers of Health, public drug plans make the final decision about listing a new drug on the formulary, and the reimbursement price and conditions, within a budget allocated by the Minister.

This complex process determines the availability of new drugs, and how long Canadian patients must wait for insured access to new medicines. Despite its importance, policy makers have failed to scrutinize the impact of the process on access. Access to new medicines should be a higher priority for federal and provincial governments. A literature review published by CHPI in 2019, found 68 studies published in peer-reviewed academic journals from 1990 to 2018 affirming that greater use of innovative pharmaceuticals is empirically associated with improved patient and population health outcomes, reduced potential health system costs, and reduced societal costs like economic productivity losses from untreated or under-treated illness. There is a lot to be gained from improving access to new drugs.

Objective

Inter-jurisdictional comparisons of access to new medicines can provide insights about the impact of policies and regulations, the performance of regulatory agencies, and the adequacy of insurance. This study compares the regulatory and reimbursement experience of new medicines in Canada, the European Union, and the United States. It introduces a novel accrual-based analysis to account for drugs matching Health Canada approvals during the years 2016-2020 that were approved in previous years in Europe or the United States. The analysis comprehensively examines the total wait time for insured access to new medicines, measured from the first global application for marketing authorization to inclusion on a public drug plan formulary.

Access to new medicines in Canada 2016-2021: Federal-provincial v private drug plans

Access to new medicines in Canada 2016-2021: Federal-provincial public drug programs and private sector drug plans

CONTRIBUTORS
Mark Rovere, PhD candidate, Canadian Health Policy Institute (CHPI)
Brett Skinner, PhD, Canadian Health Policy Institute (CHPI)

ATTRIBUTION
This paper is corporately authored and edited based on proprietary template models and methods that are intended to facilitate regular updates. The design and content are a cumulative reflection of the diverse contributions collectively attributable to the CHPI affiliated researchers who may have variously participated in updating each edition. Data sources, methods and editorial presentation may evolve from previous editions.

CITATION
Canadian Health Policy Institute (CHPI) (2022). Access to new medicines in Canada 2016-2021 Federal-provincial public drug programs and private sector drug plans. Canadian Health Policy, APR 2022. ISSN 2562-9492 https://doi.org/10.54194/GCAP7754 canadianhealthpolicy.com.

Introduction

What good is your drug plan if it doesn’t cover new medicines?

Good drug insurance should provide financial protection from unexpected and unaffordable costs of accessing necessary medicines when you or your family experience serious health challenges. Most prescription drugs are priced low enough (relative to other household expenses) to be affordable as an out-of-pocket expense which does not require insurance.  Older versions of widely used drug products tend to be the most affordably priced. Newer products – often the latest treatment advances, first-in-class therapies, or targeted therapies for rare diseases – can be expensive and unaffordable without insurance. Therefore, it is important to measure the quality of benefits provided under your drug insurance plan according to how good the coverage is for new medicines.

Since 2013, CHPI has regularly compared the quality of the benefits in private versus public drug plans, according to the scope of coverage for new medicines. Our analysis raises awareness about differences in the insurance benefits provided to patients and informs policy discussions about how best to achieve socio-economically optimal drug insurance systems in Canada.

The research is important because the federal government has proposed replacing Canada’s private-public prescription drug insurance system with a single-payer national pharmacare program that would be modeled on existing public formularies. Public plans cover far fewer new drugs compared to private plans in Canada. Public plans also take much longer to cover new drugs compared to private plans. The limited scope of coverage in existing public drug plans is indicative of what Canadians can expect from national pharmacare. The results of this study forewarn that national pharmacare will reduce access to new medicines for Canadians currently covered under private plans.

Objective

The study compares the percentage of available new medicines listed on the formularies of public sector and private sector drug plans; estimates how long Canadians waited for insured access to the available new medicines; identifies causes of limited availability and excessive waits, and recommends practical policy options.

Pharmacy scope of practice and access to Opioid Agonist Therapies after COVID-19

Sarah Lussier-Hoskyn, MA Economics BPHA, affiliated researcher CHPI
Brett Skinner, PhD, CEO CHPI, Editor CHP Journal

Under the regulations contained in the federal Controlled Drugs and Substances Act (CDSA), prescribing, selling, distributing and other related activities involving drugs like opioids are only allowed for designated health professions. On March 19, 2020, Health Canada issued an exemption, temporarily expanding pharmacists’ scope of practice to include activities usually prohibited by the CDSA. The exemption was implemented partly to facilitate continuity of access to opioid agonist therapies (OAT) for people suffering from opioid use disorder (OUD) during the COVID-19 pandemic. This article discusses the implications of making the exemption permanent.

PREVIEW: January 27, 2022 | PUBLISHED: January 31, 2022

Comparing wait times for an Alzheimer’s treatment in Canada and other G7 countries

Soeren Mattke, MD DSc, University of Southern California, Los Angeles, USA
Mo Wang, MS, University of Southern California, Los Angeles, USA

The emerging disease-modifying Alzheimer’s treatments present a health system challenge because of the combination of a large prevalent patient pool and a complex diagnostic process. Analyses of system preparedness have projected Canada to have the longest and most protracted wait times for access among G7 countries. This policy analysis used comparative health system data and 17 semi-structured interviews with experts in Canada. The authors conclude that Canada faces a unique challenge to make a disease-modifying Alzheimer’s treatment accessible because of limited capacity for memory care.

PREVIEW: January 27, 2022 | PUBLISHED: January 31, 2022